Divorces Involving
Family-Owned Businesses

Working with us on Divorces Involving Family-Owned Businesses

There are four main ways of dealing with a family-owned business interest in a divorce:

  1. Continue as business partners after the divorce. It is rare, but not unheard of, to continue a business partnership with your spouse after a divorce. If you choose to continue as partners after divorce, you will need to address operational issues, and have an exit strategy, so that either of you can gracefully end the partnership later if it’s not working.
  2. Divide the business in some logical way.  Though many businesses are not amenable to being severed, some (a real estate rental business, for example) are easily divided.  In this type of situation, the most contentious issue will likely be the value of the interest or assets each party receives.  If the business has a significant value, it may be worth it to get a business valuation.  If the business has a low value, you may want to avoid the expense of a valuation and rely on other means of valuing the business, such as a CPA, buy-out agreement terms, and analyses of financial statements and tax returns.
  3. One spouse buys out the other spouse’s interest. While a buy-out of one spouse is often the preference for both parties, frequently the business is the parties’ largest asset, cash is in short-supply, and payment over time is the only option.  If this is the case, there are complex issues that need to be addressed, including bankruptcy and debt issues, tax issues, and a financial strategy for living in the meantime, whether you are the business-owner spouse or the departing spouse.  In additions, the valuation of the business is likely to be a significant issue in your divorce.
  4. Liquidate the business and divide the proceeds.  While this option avoids issues such as continuing on as business partners, valuing the business, or structuring a buy-out, it may not be realistic if the family business was one or both spouse’s livelihood.

Your lawyer will have significant experience in cases involving business interests.  While many divorce lawyers lack significant business experience, our firm’s strong business practice means we are uniquely qualified to handle these complex cases.

Looking for more information?