Many couples opt to start a business together during a relationship. For some, this is a chance to get involved with something together. Both parties might take a hands-on approach to running the company. This may work as long as they’re in a relationship, but it can lead to problems if they opt to divorce.
Once they make the decision to divorce, they have to determine what will happen with the business. This is a decision that has to be made together, and it isn’t always a simple one to make. There are four options that might occur.
Option 1: Close the business
For people who have worked hard to build a business, closing it because of a divorce may not be desirable. This option is typically used by people who know that the business isn’t likely going work out with any of these other options. Some couples will decide to close the company if the liabilities are too great to recover in a sale.
Option 2: Sell the company
Some couples will sell the company and split the profit. This is ideal when neither person wants to continue running the business and if there aren’t a lot of liabilities. One issue that you might face if you choose this option is that you may find it difficult to find a buyer quickly. This could mean that you need to make arrangements for the business until a buyer is found.
Option 3: One party buys the other out
If one person wants to keep the company and the other is willing to let it go, the one who wants it could buy out the other person. These agreements must be worked out carefully. In some cases, a cash payout is made. In other cases, there might be profit sharing, asset transfers or similar arrangements made. Everything related to the buyout should be spelled out in detail.
Option 4: Run the business together
While it isn’t conventional, some people choose to run the company together even after the marriage ends. Make sure that the duties for both parties are clearly outlined. You should also cover other factors like pay, bonuses and similar matters so there isn’t any question about what’s going to happen. Conflict resolution methods are also a good point on include in the agreement.
Regardless of how you plan to handle the company, you and your ex need to have the agreement put in writing. This helps to ensure that there aren’t any questions later about what should happen. Your attorney can help you to get this and other matters related to the divorce handled.