Divorce is never easy, and it gets more complicated when a couple begins a successful business after their marriage. There are very few people who divorce and are then able to manage working together on a daily basis. Therefore, dividing the value of the company amongst the parties is usually the end result in such situations. One party may choose to buy out the other party’s interest in the business because the running of the day to day operations is generally best left for one spouse after a divorce. Alternatively, the parties may choose to sell the business and divide the proceeds. There are exceptions where the parties choose to remain business partners after a divorce. Using mediation for such situations, rather than going to court, is an effective way of ensuring both parties continue to profit from the successful business.
Splitting the Business Down the Middle
There are some businesses where splitting a company is relatively easy, and each person has their own territory. Mediation can help the parties decide which one gets a particular territory. Each party retains their own share of the business, and they can negotiate physical territories so they do not steal each other’s customers.
Only One Partner Keeps the Business
Many businesses today require licenses and splitting the business in half will not work if only one person has the licensing necessary to own the business. This does not mean the other party has no ownership but they cannot own a business under a license they do not possess. If such a case went to litigation a judge could force the party still working in the business to pay the other the value of their share, this could ultimately result in the business shutting down. Once the business is gone, the non-business partner cannot collect on assets or future income.
An Enforceable Agreement
It is imperative for the partner who cannot own the business to ensure they collect their fair share of past and future profits. In such a situation working out out an agreement through mediation would be in both parties’ interests.
If you are a small business owner and have questions regarding options for splitting your business through divorce mediation, please call me to schedule a consultation, (508) 752-2727.