What to do with your business when you divorce your partner

What to do with your business when you divorce your partner

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If you are in business with your spouse, you have likely dealt with your share of disputes. Even if you drafted a careful business plan, you may have come across issues about which your opposing views could find no common ground. Still, you managed to make a successful go of it, and your company may have grown to provide your family with comfort and stability.

Now that you and your spouse are no longer able to successfully work through those conflicts, you have decided to end the marriage. However, that means the fate of the business is also on the line. If your business plan did not include a contingency for divorce and you did not draft a pre- or postnuptial agreement, you may have no choice but to battle it out. Deciding what to do with the company takes careful consideration and understanding of your options and their consequences.

Keep it going

The easiest solution may also be the most difficult, and that is to continue running the business as it is. This will allow you to skip the costly and often contentious process of valuing the company. An additional benefit is that your employees can continue working without worrying about having to find new jobs.

If you and your spouse expect to be able to continue an amicable and friendly relationship after the divorce, continuing with the business may be a good option. However, not many couples are able to carry on after the emotional fallout of a divorce, and for some, staying in business together is simply postponing the inevitable.

Going halves

Deciding that you cannot stay in business together leaves you and your spouse with two choices, both of which will mean changes for the business. The first is for you to buy your spouse’s share of the business, or for your spouse to buy your half. This begins with an appraisal of the complete worth of your company. You can each hire your own appraisers and haggle over the differences in their reports, or you can save money by agreeing on a single valuation.

The purchase of the other spouse’s half of the business may be a cash transaction or you may negotiate with other assets you intend to divide in the divorce. For example, you may give up your half of the business in exchange for the house or the vacation property.

Starting fresh

Whether because of financial constraints or a loss of interest in keeping the business going past the divorce, many Colorado couples opt to sell the company and split the profits. This may take time, but when the business is sold, you can always start a new business, this time being careful to include contingencies for remarriage or future divorces.