Every married couple’s divorce is different and for every individually different divorce, there are at least two different opinions, stories, and interpretations of how and why the divorce occurred in the first place. Because each divorce is different, each divorce involves its own specific and unique challenges, disagreements, tests, and hopefully at least a few resolutions.
One of the most common and challenging hurdles that divorced and or divorcing couples must face exists when the couple jointly operates a business during marriage. Below we will be discussing some potential resolutions, solutions, and compromises that two co-business owners and ex spouses can make that will be best for both parties involved.
Should You Stay In Business With An Ex After Divorce?
Co-Business Owners and Ex Spouses
Because the majority of businesses in America are family owned, it is no surprise that a common hurdle that many divorcees face exists when the couple jointly operates a business during marriage. Does it make sense to continue to run the business together, or would it be better to sell the business or have one spouse buy the other out?
Keeping Vs. Selling the Business
Because the breakup of a relationship and the divorce proceedings that follow can be a very contentious and emotional matter, the co-owned business will usually end up being sold or having one partner buy the other partner out.
Sometimes these situations can lead to very drawn out, emotionally draining and just all around unpleasant property settlement case that can be drawn out for many years, while being fought out in a court of law.
However, in certain situations staying in business together after a divorce may be a good idea. If a business is growing rapidly, or each spouse has a unique skill set that contributes to the business, then staying in business may be the right choice.
Not Staying in Business Together Can Lead to Complex Property Division of Business Ownership
Divorces that involve complex property division involving high assets, business ownership, professional licenses, and other complex financial matters have the potential to be high conflict and high profile. Divorces of this nature must be handled carefully and with knowledge.
In divorces involving spouses of high income and net worth, who own business assets, or properties, several problems must be resolved, especially when contesting spouses each claim an asset as their own and not subject to community property laws. Determining value and worth of assets is another complex issue that almost always requires the involvement of an attorney.
Staying in Business Together After the Divorce
Even if it makes sense to stay in business together on paper, the business will not be successful unless the former spouses can work effectively with each other. The former spouses must be able to remain rational when it comes to business making decisions, communicate without holding grudges, and ultimately work together productively. (See: Reasons Why Opposites Attract)
Successful Business after the Divorce
If the former spouses feel they can set their personal differences aside, they should also put certain ground rules in writing. In general, the former spouses should create rules that provide guidance as to each individual’s role in the company, as well as articulate the mechanics of who runs the business, how profits and losses are distributed and transferring ownership interests.
Most Importantly, Make Informed Decisions after Careful Consideration
Whether you think you can stay in business together or you believe splitting up the business in addition to the marriage is the best choice, careful consideration of your wants and needs is required.