If you and your spouse own a Florida business but are contemplating divorce, your business in all likelihood represents a major portion of your marital assets. Consequently, deciding what to do with it is one of the most important decisions you and your spouse must make since it affects not only the business, but also your property settlement.
Basically, you have the following three options:
- Sell your business and split the sale proceeds between you
- One spouse buys the other spouse out
- Continue to own and operate your business together after your divorce
Which decision you make will depend on a variety of factors, including how much emotional investment you have in your business, how much you enjoy – or dislike – operating it, whether or not you have any partners, etc.
Sale
Selling your business and splitting the proceeds is fairly straightforward but does entail determining its value and consequent sale price. You probably will need to hire a professional business evaluator. While the cost may be high and the evaluation take several weeks to complete, depending on the size and complexity of your business, this is the best way to arrive at a realistic sale price. If your business then sells within a reasonably short period, you and your spouse both have a large cash inflow to do with as you please while you get on with the rest of your respective lives.
Buyout
Your second option is for one of you to buy the other out of the business. Again, you undoubtedly will need the services of a professional business evaluator to arrive at an overall business value so you and your spouse can then determine which of you will buy the other out and for what price.
If you are a high-asset couple with substantial nonbusiness assets, one of you may wish to trade some of these other assets for the other’s business share. If, however, your business represents your only major asset, then the buyout must somehow be paid for. If the spouse leaving the business does not demand a lump sum buyout, one option is for the business to borrow money via a property settlement note. In this way, the business itself, through the remaining spouse, pays the leaving spouse over time with interest.
Joint business continuation
The third option you may wish to consider is continued joint business ownership after your divorce. While this may sound unfeasible at first blush, many divorcing couples find that it is a very workable solution. It all comes down to whether or not you and your soon-to-be ex-spouse can work together on a professional level even though you cannot live together on a personal level. If you believe you can, this is the best option for your business itself. Nevertheless, business experts strongly recommend that if this is the route you choose to go, you hire an experienced business law attorney to draft an agreement setting forth the business responsibilities each of you agrees to undertake, as well as a future buyout amount or percentage in case you and your ex-spouse discover that you cannot work together professionally after all.