In previous blog posts, we have discussed how divorcing spouses can divide a family business. Yet, what if both spouses want to continue the business? A recent article in The New York Times discussed couples that have been able to remain business partners after deciding not to be life partners.
Usually, divorce attorneys would advise their clients to either sell their family business and divide the assets or let one spouse buy out another. Yet, in some situations, it is possible to keep the business going and have a successful business relationship.
For example, the couple highlighted by The New York Times built a successful law firm together. When they divorced eight years later, they decided to try to continue their 50-person firm. Their working relationship remained successful, allowing them to continue the business to this day, six years after the divorce.
How do you know if you and your spouse will have a similar success story? Only time can tell, but there are some things you can do to help it along, including:
- Determine whether you and your spouse can continue to have mutual respect for each other. Can you trust each other? If you cannot, then it will be difficult to continue to run a business together.
- Outline your plan in your divorce agreement.
- If you have not already done so, create a business agreement (partnership agreement, shareholder agreement) that outlines what should happen should one of you decide to exit the business. What is your exit strategy? Who should receive what shares of the business?
- Consider seeking counseling to help you through the issues in your divorce that may affect your business.
- Be upfront with your employees to maintain trust among them and show that you and your ex-spouse still respect each other.
Most importantly, your divorce, like your separation, should be amicable in order to move forward as business partners. An experienced divorce lawyer can help you work through the complications in your divorce and discuss the options for your family business.
Learn more by visiting our page on valuation and division of businesses.
Source: The New York Times, “When couples divorce but still run a business together,” Bryan Borzykowski, Dec. 5, 2012