Navigating Divorce for Business Owners

Divorce presents many challenges, especially when one of the spouses owns a business, or when the two own a business together.

Just as is true of dividing personal belongings and determining child custody and support, assessing the best way to address business assets can be emotional, and can invite additional animosity. The best strategy is to work with divorce attorneys who also have expertise in the disposition of business assets, or who have access to experts who can help.

Here's some food for thought on the challenges faced by divorcing business owners, and some helpful strategies to consider.

• Determining the business’s value is always the first step before moving forward with any discussion of the future. It is essential in calculating the division of existing assets, as well as of earnings potential. The best way to manage this is to hire a neutral third party with an established reputation for being objective. The goal is clarity and accuracy in obtaining up-to-date numbers.
• Every divorce is different, and this is especially true when ownership of a business is involved. In some cases, it will be clear that the business should be sold, or that only one of the two spouses will continue as the business owner. In other cases, both spouses may be so heavily invested in the business’ success that they decide to continue working together despite the end of the marriage. Whatever outcome is eventually agreed to, it is important to protect the business’ interests while the process plays out. Work to keep employee morale up and continue operations as normal so that clients will continue to have faith in the business. Maintain a professional approach and keep personal grievances or stressors separate from the business.
• Be open to creative options for how to settle the ownership of the business. While a straightforward division of assets may be the most obvious answer, it may not be possible in light of financial realities. Other possibilities include a structured buyout over time or trading other marital assets in exchange for the other party keeping full ownership of the business. You may also need to consider securing financing or selling non-essential assets to meet liquidity needs.
• Assuming that the goal is to preserve the business as a going concern, work to reach a fair settlement that doesn’t interrupt or interfere with operations. Negotiation or mediation can be invaluable tools for achieving this goal, and financial experts can help to clarify what’s needed to ensure long-term business success or how to maximize the proceeds of a sale.

As with every legal challenge, it’s always a good idea to work with an experienced professional who can help you work through the complexities of the journey.