Connect with us

Business

What Divorce Means For Family Business – How To Deal With It

One of the toughest emotional and entrepreneurial challenges is keeping a family business together with your ex-spouse after getting divorced. Spouses simply become more protective of their individual assets as well as of themselves, and the only way a shared business can survive is by putting its interest in front of their own. However, in such difficult times, achieving this can be very hard. In this article, we present you different possible solutions for maintaining your business and keeping it afloat after the divorce is finalized.

What Divorce Means For Family Business - How To Deal With It

Determining Business Value

In divorce, this is probably the most critical process that concerns family business. It represents the value of your business assets today as well as the value of expected future benefits. The best way for determining the value of your business is to hire a professional valuation analyst who will follow strict valuation principles when valuing your business worth. If you decide to sell it, this price can be used in negotiations with possible buyers. The bad thing about the whole business valuation process is that family businesses often go through rough time during its owners divorce, having their value and performance drop significantly.

Business Continuation

In case the spouses are rational enough to decide to continue managing their business, even though they were not able to manage their marriage, they would probably decide for the best option. Running a business requires different skills, so if spouses realize this, put their differences aside, and come to an agreement, they would do the best possible thing for the future of their business. Most often people find this impossible, but it can work well.

Even if a mutual agreement for business continuation is achieved, there should always be an exit strategy in case things do not work out as they thought they would. If spouses decide to end and sell their business, an exit strategy in the form of a mutual written agreement should exist to guarantee certain value to both of them and specify a detailed method that they will use to sell the business.

Severing The Business

In most divorce cases, it is possible to sever a family business into two different parts. It is a way for keeping the business afloat, because in most of family businesses each partner is responsible for certain segment. By splitting the business into two parts which would not be vulnerable to customer service issues and quality control caused by the other spouse, but be independent from each other, is possible in most cases. Each spouse is then entitled to change the name of its share, which may lead to new incorporation. However, corporation codes differ from state to state, and you should always have that in mind. For instance, those who are getting a divorce in Oregon should check all incorporation requirements of their segment of the family business at Secretary of State because they might be a significantly different from other states.

Selling The Business

If a mutual agreement regarding business continuation cannot be achieved, divorced couple can decide to sell the business. This may be the best solution, because if a cold headed business relationship is impossible, the business will continue to plummet down due to lack of understanding and support between the spouses. They can decide to sell some expensive assets separately (production plant, office building, or land), or hire an analyst to value their business, and the form a reasonable selling price around valued figure. In order to make a good sale, it is crucial to spread the word on all the right places. Also, not mentioning the divorce to possible buyers is important when negotiating the sale. Otherwise, they will know you are in a hurry and may try to lower the price down.

Conclusion

When going through a divorce, which is difficult enough from an emotional aspect, when things such as family business are in question, one must try to remain cold headed and rational as possible. Finding a mutual ground with your soon-to-be-ex is important, so you can discuss the future of your business and find an agreement that works the best for both of you.

Recent Posts

What Do Business Consultants Do What Do Business Consultants Do
Business2 hours ago

Running a Business? How to Minimize Supply Chain Issues

Supply chain issues have always been an issue for businesses but over the last few years, the effect and widespread...

Home Improvement1 week ago

How to Increase Your House Value Before Selling

Increasing home value is the first step to making your place more attractive for future buyers. Whether you are trying...

General2 weeks ago

Why Calorie Control Is Still The Best Way To Diet

There are a great deal of different options when it comes to dieting, every day there seems to be a...

The Benefits Of Trade Credit Insurance For Your Business The Benefits Of Trade Credit Insurance For Your Business
Business3 weeks ago

The Benefits Of Trade Credit Insurance For Your Business

Trade credit insurance provides cover for businesses who trade on a credit basis. If the people who owe money for...

5 Charming Restaurant Decor Ideas In 2022 5 Charming Restaurant Decor Ideas In 2022
Miscellaneous4 weeks ago

5 Charming Restaurant Decor Ideas In 2022

Making your restaurant memorable and stand out is a feat worthy of praise. The sheer pressure of wanting to succeed...

Bank Won't Fund Your Business? 4 Loan Alternatives To Get You Started Bank Won't Fund Your Business? 4 Loan Alternatives To Get You Started
Business1 month ago

Bank Won’t Fund Your Business? 4 Loan Alternatives To Get You Started

Businesses typically require some sort of collateral or proof of concept before funding their business venture. However, it is possible...

Planning A Stag Do Planning A Stag Do
Miscellaneous2 months ago

Planning A Stag Do

If you’re a Best Man then you’re in a unique position of responsibility, and before the day itself when you’ll...

Tips to Reduce Eczema Flare-Ups Tips to Reduce Eczema Flare-Ups
Health2 months ago

What Triggers Eczema | Tips to Reduce Eczema Flare-Ups

Eczema is a skin condition that can induce redness, itchiness, and skin inflammation. Its root cause is not fully understood,...

Women's Fashion Trends To Expect In 2022 Women's Fashion Trends To Expect In 2022
Lifestyle3 months ago

Women’s Fashion Trends To Expect In 2022

A new year means new fashion trends. We cannot wait for what is in store in 2022. It seems that...

Home Makeover Trends: Insights from The Pros Home Makeover Trends: Insights from The Pros
Home Improvement3 months ago

Home Makeover Trends: Insights from The Pros

Are you considering a home makeover but don’t know where to start? You’re in luck! In this article, we will...

Interior Design Trends 2022 Interior Design Trends 2022
Home Improvement3 months ago

Interior Design Trends 2022

We all spend time pining over other people’s interior’s on Pinterest or Instagram, but with these trends, it’s easy to...

Top Commonly Overlooked Car Maintenance and Repairs Top Commonly Overlooked Car Maintenance and Repairs
General3 months ago

Top Commonly Overlooked Car Maintenance and Repairs

Maintaining a car is a huge responsibility. There’s a lot that goes into that given how complicated a machine it...

What Is The Difference Between Strata and Property Manager What Is The Difference Between Strata and Property Manager
General3 months ago

What Is The Difference Between Strata and Property Manager

Real estate is a diverse market, and as such, it can be hard to determine the differences between various types...

Sleek Home Upgrades That Will Luxe Up Your Life Sleek Home Upgrades That Will Luxe Up Your Life
Home Improvement3 months ago

Sleek Home Upgrades That Will Luxe Up Your Life

Sometimes we need a vast endeavor to make our home look extravagant and cheek but very often you can implement...

What Do Business Consultants Do What Do Business Consultants Do
Business4 months ago

What Do Business Consultants Do?

Business consultants can be a huge help to your business – or a big expense that doesn’t give you the...

Categories

Archives

Trending