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What happens when business co-owners get divorced?

You and your spouse started your business as friends. Through the early years of the company, with all of the time spent together getting it going, you fell in love. You got married. You did all of the "normal" things people do after marriage -- buying a home, having children, etc. The whole time, you kept working as co-owners and running the company.

This is where things get tricky. You and your spouse now want to get divorced. What happens to the company? What options do you have?

Selling your company

The first thing you want to do -- no matter what option you choose -- is to have a valuation done. Find out what your company is worth. Then, the first thing to consider is simply selling the business.

In a lot of ways, this is a simple option. The company has a higher value than it did when you started it. You're going to make money -- maybe a lot of money. You can sell, split it up, and move forward with your lives.

Of course, the downside is that now you have no source of income. You also lose a company that you cared about, that you put your heart and soul into for years.

Buying it from your ex

The second option is to make your soon-to-be-ex an offer for their percentage of the company. This is perhaps the most attractive option if you cannot stand the thought of losing the company but they just want to sell. If you buy them out, they get the same amount of money they would have gotten through a sale. You don't lose the company. Everyone wins.

There is a downside: You have to pay out all of that money -- it may take a loan to do it -- during a divorce. Can you afford it?

Working together

A less traditional option is to work together, just as you always have. Don't change a thing. If you get divorced on Friday, come in to work on Monday.

After all, most co-owners are not married. You can legally own a business together after the marital split. You owned it before you were married. Maybe you can just go back to what your relationship was like then.

The issue for many couples is that they can't go back. Too much has happened. Maybe they're not really on good terms during the divorce. Working together can prove to be a mistake if that relationship gets in the way.

What should you do?

This helps to show you some of the options you have. What you should do is up to you; every situation is different. Just make sure you know what steps to take.

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Schwartz Law Firm
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