Divorcing your business partner – what you need to know
Getting divorced is never easy, and not something people plan for long into the future. 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 spouse run a business together.
During the divorce process, emotions are raw and can often make decisions more difficult. When you divorce your business partner, you may be facing both the end of your marriage and 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 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 off.
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 spouse. During this process, it can be useful to have a trained mediator as well as the advice of a solicitor. A mediator will help to facilitate open discussion between the parties 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 several other options where this is not possible.
Can I buy out my former spouse?
One party may be able to buy out the other, which would mean buying 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 partner maintenance, or they could make a lump sum payment.
Splitting the assets of a business
If you cannot come to an agreement, or one party wants to buy the other out, the business assets must be valued. In many cases, the business assets will not be equally split. For example, when an agreement has been drawn up or one party spent more time building the business. Dividing business assets can be complicated, so we would always advise seeking specialist legal advice on your position.