Divorcing your business partner – what you need to know
Getting divorced is never easy, and not something people plan ahead for. Similarly, when spouses go into business together, they rarely consider making a commercial agreement. As a result, divorce can be even more challenging where you and your husband or wife run a business together.
During the divorce process, emotions can run high and this can often make decisions even more difficult. When you divorce your business partner, you may be facing both the end of your marriage and potentially the loss of a long term business dream. We understand how hard this can be. In this article, we answer some of the most common questions about what happens when you divorce when you own a business together.
Will I lose my business?
It is uncommon and unlikely that you will lose your business or have to sell it if you do not want to. While the court does have the power to order the sale of a business, it is very careful in using this power. After all, a successful business is likely to provide for you and your family for years to come, so it would not be in your interests to sell it and end the income it generates.
Coming to an agreement about the future of the business
The most straightforward way to determine what will happen to your business is to come to an agreement with your husband or wife. Your solicitor will help you to explore options and help to facilitate negotiations with a view to reaching an agreeable settlement. In some cases, couples are able to continue to run the business and have a good working relationship. However, there are other options when this is not possible.
Can I buy out my former spouse?
It is common for one party to buy out the other party’s share in the business. There are several ways to do this, for example, one party may retain ownership of the business and pay their ex-partner a lump sum or regular maintenance. It can also be off-set against another asset so one person retains the business and the other retains a property or savings, for example.
Valuing a business
If you cannot come to an agreement, or one party wants to buy the other out, the business assets will need to be valued. We would normally recommend instructing an expert jointly to value the business on behalf of both parties. This helps to keep costs down and to avoid a situation where there is a dispute about the value. There are different ways in which a business can be valued. Working in conjunction with the expert valuer, we can advise you as to the appropriate approach to take.
Dividing business assets can be complicated, so we would always advise seeking specialist legal advice on your position. At Wolferstans, we have a team of expert solicitors with a wealth of experience in advising business owners going through a divorce. We can guide you through the process and help you to achieve a fair settlement for you and your family.
Get in touch to speak with one of our expert divorce solicitors 01752 292201.
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