As if getting divorced is not hard enough, what about spouses who co-own a business? Will the business continue after the divorce? Will the ex-spouses continue to operate the business as a team? Will one spouse run the business alone? Are there other options?
There are essentially three ways to handle a business owned by spouses following the divorce:
- One spouse buys out the other. One spouse will retain the business by buying out the other spouse’s interest in the company. This would require a determination of the percentage of ownership of each spouse, as well as other marital asset divisions.
If the business interests happen to be the largest asset in the marriage, the spouse who buys out the other could be left with little else aside from the business. The court might require them to make equalization payments to the ex for months or years in the future.
Depending on the nature of your business, a Non-Compete Clause might be required when one spouse buys out the other. This would prevent the spouse whose interest in the business is bought out from starting a competing business and taking clients.
- The business gets sold. The business is sold, and the proceeds are split between the spouses, according to the equitable division rules in Georgia.
Fair market value for the company would have to be determined, as well as how business responsibilities would be divided until the business sells. If there are additional owners of the business, the issue becomes exponentially more difficult.
- Co-own the business together. You keep the business, and you and your spouse continue to manage the business together.
Remaining Co-Owners of an Atlanta Business
This option can be risky, especially if your divorce is contentious. By keeping the business and remaining co-owners, you and your ex must co-exist relatively peacefully in the business world.
In other words, if your spouse—or you—are bitter and angry regarding the divorce, it is not especially practical to run a business together on a day-to-day basis.
A successful business partnership requires the following:
- A shared vision. A shared vision regarding the future of the company is key. If your spouse’s goal is the Fortune 500, but you want to keep the business small and personal, co-ownership is unlikely to be successful.
- A common mission. e., you both would like to improve your community or make a difference in the lives of your customers. If there is no shared mission, it can become extremely difficult to co-own a business.
- Common core values. These are essential to running a business together. If you believe strongly in customer service after the sale, but your spouse believes once the sale is complete that’s it, operating a business together may not be feasible.
- Different talents. Finally, it is important that each spouse bring a different talent to the table. If you are both good at customer relations, but neither is good at the financial side of the business, then you may find yourself stepping on one another’s toes.
What if Your Business Goals Do Not Align with Those of Your Spouse?
Even if you and your spouse had the same business goals during your marriage, you may not still have the same goals after the divorce.
As an example, perhaps one reason for your divorce was your spouse’s single-minded devotion to growing the business. Following the divorce, your spouse still has that goal, but your goals have changed. Maybe now you want to be able to take some time away from the business and engage in things you now find more important to you and your future.
If this is the situation, then one of you will almost certainly have to change your business goals. If neither of you is willing to do so, it is unlikely this will be a sustainable business relationship.
What About Silent Partners?
Some spouses choose a fourth option, and for some, it works out well. One spouse becomes a “silent partner” in the business, while the other makes the day-to-day decisions on how the business will be run.
The spouse who is running the business will be entitled to a larger share of the profits, but the other will still be a part of the business, helping make the big decisions regarding the future of the business. The silent partner will have to have a certain amount of trust in his or her ex for this to work.
Whatever decision you and your spouse make regarding a co-owned business, that decision might be best made by speaking to a business coach who can help you determine whether you and your spouse should continue to run the business together, and, if so, the best way to do so.
Contact Our Atlanta Divorce Lawyers
At Hobson & Hobson, P.C., our Atlanta divorce attorneys know that managing a business with your ex is not easy. However, we want to make it easier by protecting your business and your ownership rights at every turn,
If you are considering a divorce, and you currently own a business with your spouse, we can help. We work to help you move through the divorce process smoothly and efficiently whenever possible.
Call us today at (770) 284-6153 or fill out our confidential contact form. We can set up a consultation so that you can review all your legal options.
Attorney Sarah Hobson at Hobson and Hobson, P.C. are powerful advocates for those who fight for better futures for those going through divorce and custody law matters.
