Divorce is a critical moment for all family businesses, especially if both spouses took part in company’s development. Other than usual chronic lack of free time and plenty of stress divorce causes, which both hamper business performance, business owners who filed for divorce often need to indulge in various legal battles, in order to secure more assets for themselves. In this article we will inspect ways spouses can use to save their businesses and continue running it together or as part of two separate corporate entities

How divorce process affects family business?

Unfortunately most divorcing family businesses, show slower performance, due to lack of time and energy that divorcing spouses invest in company’s management. That’s why family entrepreneurs from states with more simplified divorce processes have more chances to continue running successful business. Spouses in Oregon can divorce online for example, which leaves them a lot of time to commit to their company’s future development.

How to determine the value of your business?

Even if spouses want to continue running their business together, filing for divorce is definitely the right time to determine overall business value in case some spouse wants to sell his/her share or plans to start a separate entity. Value of certain business represents the value of its assets and potential benefits that will come ahead. Of course from this figure you need to subtract company’s financial liabilities. If you want to determine more detailed and accurate value, you should hire Certified Valuation Analyst, who will use strict valuation principles in order to determine consistent value. This value can be used for future negotiations if spouses wish to separate their assets or sell out their whole business venture.

Continue like nothing happened

In business world you can find plenty of successful business owners who continue running their company together even after the divorce. Although most people ask for divorce the moment they think they are not able to manage their marriage, this doesn’t need to reflect on their family business. 

If family business assets are listed as ‘community property’ spouses need to arrange different property division, which will create an exit strategy for each spouse, in case he/she wants to leave the project. This way they will avoid long litigation process and enable the spouse who decides to stay, to run the company without legal obstacles.

Severing family business after divorce

This is another practical solution that will allow spouses to run their part of the business independently. To do this you need to create two different departments that won’t be vulnerable to each other’s mistakes. You should also introduce separate company names and incorporate two separate companies as soon as possible.


What if your divorcing spouse isn’t so cooperative?

All previous examples are designed for spouses who divorced in a friendly way. Since these types of divorces are not so common these days, here are some advices that will help you to gain your share of family business, in case your spouse isn’t open for compromise:

• Prevention is the best cure in these situations, which is why you need to create prenuptial or buy-sell agreements, long before you even start thinking about a divorce.
• Hire great lawyer and make sure he/she protects your interest in the best way possible. Many lawyers tend to prolong proceedings in order to charge more.
• Either take business or the money. Business that is being run by two partners that hate each other, usually doesn’t perform well on the market.

One of the most important things for all divorcing entrepreneurs is to keep themselves focused. After the whole process is over, they should stay focused on business and leave their emotional burden in front of their office for good. The moment they successfully separate business from their private life, they will return to the old success path.