Divorce and Your Family Business: What Do you Do?

A woman and her divorce lawyer reading divorce papers in front of her soon-to-be ex-spouse

A family business can be a great source of pride and income, but what happens when the family that owns the business is broken apart? Divorce happens to almost half of all marriages, even today. While every divorce is different, there are some general principles that apply when it comes to dividing up a family business. Take a look at what a divorce does to a family business and how to divide assets and liabilities in such a situation.


The first thing to understand is that a divorce does not automatically mean the end of a family business. In many cases, the business can continue to operate successfully with one spouse taking over ownership and responsibility for the company. In fact, despite the high rate of divorce, 40% of family businesses are passed on to the next generation. As the owner of the family business, you’ll need to take steps to protect the company and ensure that it continues to operate successfully. The business may also be faced with uncertain financial times and the family may be dealing with the emotional stress of the divorce.

If you’re facing divorce and you own a family business, the first step is to sit down with your soon-to-be ex-spouse and have an honest conversation about what you both want for the future of the company. If you’re able to come to an agreement, great! If not, then you’ll need to start thinking about whether or not selling the business is the best option.

If you decide to keep the business running, you’ll need to be prepared for a lot of stress and tension between you and your ex-spouse. It’s going to be difficult to work together harmoniously when you’re no longer on good terms. In fact, it’s likely that things will only get worse as time goes on. This can be a recipe for disaster and could lead to the business failing.

If you’re not able to come to an agreement about the future of the business, then it may be best to sell it off and move on. This can be a tough decision to make, but it’s likely to be less messy and stressful than trying to keep the business running with a spouse you’re no longer getting along with.

Divide Responsibilities and Schedules

If you’re getting divorced but you and your soon-to-be-ex-spouse want to keep the business running, one of the first things you’ll need to do is divide up the responsibilities. This can be tricky, especially if you and your ex-spouse are not on good terms. You’ll need to come up with a schedule that works for both of you and make sure that everyone who is involved in the business knows what’s going on.

It’s also important to establish clear boundaries when it comes to interacting with your ex-spouse. You don’t want to be talking about company business with them over dinner or during a family get-together. Keep all communication related to the business professional and avoid anything that could lead to tension or conflict.

If you’re having trouble dividing up the responsibilities, consider hiring a mediator to help out. You can also ask for help from your divorce lawyer. They can help you come up with a plan that works for everyone involved and will make sure that the business continues to run smoothly despite the fact that your family is no longer together.

Assure the Stakeholders

One of your main priorities should be to maintain communication with all stakeholders in the business. This includes your other shareholders, and your employees. Keep them updated on what’s happening with the company and make sure they understand how the divorce will affect them. You may also want to create a crisis management plan in case things get messy.

Another key element of your PR strategy will be to ensure that your company is portrayed in a positive light. This means being proactive about addressing any rumors or negative publicity. Make sure you’re putting out positive news stories about the company and highlighting its success.

Divorces are never easy, but if you take the time to put together a solid PR strategy, you can help minimize the impact on your family business.

A couple signing divorce papers

Selling the Business

There are a few things to keep in mind if you do decide to sell the family business as part of your divorce settlement.

First, you’ll need to determine how to value the company. This can be done by hiring a professional appraiser or by using a formula that takes into account things like earnings, assets, and liabilities. Once you have a value for the business, you’ll need to negotiate with your ex-spouse on how to split up the proceeds. In some cases, it may make sense to sell the business outright and divide the money evenly. In other cases, one spouse may get primary ownership of the company in exchange for giving up their share of other assets (such as retirement accounts or real estate). This is something that is best handled by divorce attorneys since they are experienced in this area.

Final Thoughts

Dividing up a family business in a divorce can be complex, but it’s important to remember that it’s not impossible. With careful planning and communication, you can come up with an arrangement that works for everyone involved. And if selling the business is ultimately what’s best for both parties, there are steps you can take to ensure that the process goes as smoothly as possible.

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