You put a lot of sweat, tears, and blood into building your business and getting to the point where you are right now. You don’t want to have to give up the business entirely now that you are getting divorced. Maybe you are worried that your spouse will try to take all or part of it from you. Maybe they helped to grow the business and they feel just as entitled as you do.
Do You Want to Keep the Business Going?
One of the first things you have to ask yourself is just how much you want to keep running the business. Were you just keeping the business going because you were still married, and both involved in the business? Maybe now that divorce is on the horizon, you might be looking into the possibility of getting out from under the business. Perhaps you don’t want to run it any longer.
If both you and your spouse feel that way, you could dissolve the business and make sure the assets have been split accordingly. You and your spouse could each then go your separate ways.
However, that’s not always possible. Sometimes, it’s because you love the work and you put a lot of effort into your business. Other times, it’s the only thing you know and your only source of income. Regardless, you may need to rethink what is happening with your business to ensure you come out okay.
First, you will want to think about ways that you might be able to work out an arrangement with your spouse. Even though the two of you might not be getting along, you might still be able to work out some sort of deal with the business.
What Comes Next in the Business?
When you are getting divorced, you and your spouse will have a few options regarding your business.
If one of the spouses believes they should have the business, they might attempt to buy out the other spouse. This could make sense when you are the face of the business, for example. This will often happen when one of the spouses is more involved with the business and the other might work more behind the scenes.
Before a buyout occurs, it’s a good idea to have the business valued by a third party. This will give both spouses an idea of what it is worth. This is essential for buyouts, as well as negotiations.
Sometimes, one partner might not be quite as connected to the business as the other. They might not want or need the business, but they are entitled to a portion of it. In these cases, it might be possible to negotiate. Perhaps some of the other property and assets could be traded for the business.
There is another option, but it’s not something that will work well for most people. In some cases, especially when part of the value of the business or brand is derived from both spouses, working together could be an option. This is because the business is more valuable with both of you together than it would be for either of you separately.
This isn’t likely what people want to hear, though, as they want to be away from their spouse. That was the purpose of the divorce, after all. Still, there may be some businesses and situations that would benefit from this, at least temporarily.
However, you know your spouse better than others. If there’s no way it would work, you don’t want to try to force it.
You Will Need a Business Valuation
No matter what you want to do with your business, you will want to have it valued by a professional. An accurate valuation is essential for the court to reach fair distribution.
A business valuation will typically be based on one of several valuation methods. The evaluator may look at the assets, the earning value, or the market value of the business. This is true regardless of the size of the business or the divorce.
Once you have a valuation, you will be able to figure out what’s best for your company. Should you try to buy out your spouse? Should you give up the company? Should you continue to work together? What works for some might not work for others, so don’t make a major decision without truly thinking about it.
What If You Get Married Again?
While we can’t go back in time and tell you to sign a prenuptial agreement with your last marriage, we can warn you to get one if you choose to get married again. Even though a prenup might not be much of a romantic gesture, you’ll find that it can help to keep your assets and your business safe in the event of a divorce.
It truly is in everyone’s best interest to have a prenuptial agreement in place. If you don’t have a prenup, you might want to consider getting a postnuptial agreement. It does much the same thing, only it can be created after marriage. However, you have to be careful here.
You can’t suddenly ask for a postnuptial agreement and then file for divorce in a month or so. This makes it appear as though you were trying to finagle business protections without telling your spouse, even though you knew you were going to get a divorce. This would not sit well with the courts either. They will likely not allow the postnuptial agreement if it appears you were trying to pull one over on your spouse.
The Split Needs to Be Fair
Although you might feel that your spouse shouldn’t get anything from your business when you get divorced what you feel, and the law, are not the same. You will need to make sure that any arrangements that are made are fair and that they don’t infringe on the rights of your spouse. If the courts see the split as being unfair, they might not allow it without investigating further.