Call Us Today To Get Started On Your Case: 262-542-4278

Cramer, Multhauf & Hammes, LLP BBB Business Review

3 options to explore when dividing a business

On Behalf of | Oct 15, 2019 | Divorce |

A divorcing couple will face numerous challenges when ending a marriage. Dividing one household into two in terms of child custody arrangements, division of assets, division of debts and division of retirement accounts can lead to emotional and financial turmoil. One of the most common financial disputes, however, centers on the complexity of dividing a family business.

A recent Forbes piece highlighted the challenges of splitting a family business. Essentially, this level of complex financial division adds another layer of difficulty to the divorce process itself. Once the business valuation has been completed, divorcing couples typically have three general paths open to them.

One spouse keeps the business

In what is typically the most common solution to business division, one spouse can “buy out” the other spouse based on the valuation. Every situation is different, however, and the spouses might need to work to determine the best method for this. If the acquiring spouse does not have enough liquid assets to purchase the interest outright, for example, the divorcing couple might be forced to develop a structured payment plan.

Both spouses keep the business

For the purposes of complex financial division, this might be the most straightforward approach. However, based on the factors contributing to the divorce, it might not be feasible for the two individuals to continue to remain business partners. If both parties have strong emotional ties to the family business, however, they might be able to make this option work for them.

Both spouses sell the business

Many divorcing couples elect to sever financial ties altogether. In these scenarios, the business can be sold with the two parties splitting the proceeds. Following the sale of the business, the two individuals can now pursue independent business interests.

Every situation is different and be complicated by financial or emotional interests. It is wise to discuss your situation with a skilled legal professional who can provide the answers and guidance you need. Whether you decide to sell or keep the business, you are likely facing a complex process.