How do you divide a business in a divorce?

On Behalf of | Sep 13, 2020 | Divorce |

If you and your spouse run a business together, you may need to divide this business when you get a divorce. There are several ways you might do this.

One option you and your spouse might consider is selling your company. According to the American Bar Association, this solution may work best if both of you agree that this is the right way to divide the business. In this situation, the two of you would find a buyer and split the proceeds from the sale evenly.

Purchase the other half of the business

If you want to continue running the company, you might buy the business from your spouse. Because you already own half of the company, you would need to purchase your spouse’s share. You might do this by paying your spouse half of what the business is worth. Conversely, you may pay your spouse the amount he or she would receive if you both sold the business.

Run the company together

Sometimes you and your spouse may decide that the best option is for you both to retain ownership. In this situation, you might continue to split the management duties. However, you may also decide that only one of you will manage the company while the other person receives half of the profits.

Learn how much the business is worth

Regardless of which option you and your spouse choose, you should perform an appraisal of the company. You may hire an appraiser together or separately. This professional will evaluate your business assets and the income to determine the fair market value of the business. You need to know the current fair market value because this amount determines how much you might ask for if you sell the company. If you choose to buy out your spouse, you will need to pay him or her based on the market value.