Many New Jersey couples own businesses together. These may include technology startups, work-from-home operations, healthcare-related practices and more. U.S. Census Bureau data reported in 2015 by CBS News indicated that roughly 3.7 million companies were jointly owned by husbands and wives. But, what happens to these businesses when the spouses get divorced? Was this accounted for when the business was created? How can choices be best made?
These are just some of the questions that arise when married couples who are also business owners divorce. On paper, the options include one spouse buying out the other, both spouses selling the business to an all-new owner, or the two spouses continuing to work together even after they are divorced. The latter is never advised, according to Crain’s. While there always exists the exception to the rule, the rule that divorced spouses do not make good business partners is true.
Whether both spouses agree to sell the company to a third party or one spouse is buying the other spouse out, the business will need to be properly valued. Using one valuation company can save money and may help to reduce conflict over the ultimate value.
Couples are encouraged to develop their individual exit strategies from the business when they first establish it. This is essentially like making a prenuptial agreement for a business. Keeping the interests of the company first and foremost is important when making these decisions. It can help a business to weather the storm of an owner divorce rather than see it succumb to the pressures.