If you own a small business with your spouse, divorce was probably not in the equation when you first took the leap to entrepreneurship. After all, you were probably both thrilled to escape Corporate America and launch a successful enterprise, one that allowed you to enjoy financial freedom.
Now that you're divorcing, one of your top concerns is probably centered on the fate of your business. After all, it probably took a lot of late nights at the office to get it to the point where it is today. If you're not ready to let go, what are your options?
Option #1 Continuing Co-Ownership
The first option is to continue with the status quo – stay where you are as co-owners. If you and your ex can make this work, this may be your best option. This means that nobody has to sell their interest in the company, and you won't have to pay for an expensive business valuation.
If you and your ex cannot handle being in the same room together for more than two minutes, you're going to have to evaluate your other options.
Option #2 Sell Your Interest in the Business
You can sell your interest in the business to your ex, or vice versa. First, you will need to get a business appraiser to perform a valuation. You can sell your half of the company or buy your ex's share, but remember, it's going to take cash. Another option is to exchange an asset for interest in the company.
Often, it's the spouse who has invested more time in the business that decides to keep it. Figuring out who has put more time in the business should be easy for you, unless you're both equally invested time-wise.
Option #3 Selling the Business
If you want to make a clean break, you can sell the business and split the proceeds. You can do whatever you want with the money, even go out and start a new business. If you choose to go this route, you will need a business appraiser to perform a valuation.
If you decide to sell, you and your spouse should considering going in on an appraiser together, that way you're not doubling the costs by paying for two valuations. Meanwhile, assemble a qualified divorce team that includes a financial advisor, a CPA and of course, an experienced divorce attorney.
To learn more about what to do with a business during a divorce, contact Claery & Hammond, LLP!