Many times, the family business is at issue during or after a divorce. That business is typically the family’s largest asset, and closest to the family’s heart. A family business stereotypically started when the couple is young and the business is not financially profitable. But what happens to the family business after divorce in Oklahoma is something that should always be taken into consideration.
Over the years, the business grows and is highly valued because the couple — and sometimes children — have committed time, energy, and made sacrifices to in order to make the business successful.
Dividing this asset can be extremely emotional and financially challenging due to the nature of a traditional family business. There are two very important steps to take prior to deciding how to distribute this asset. First, make sure any decisions you make about the business is in-line with keeping the business thriving.
Second, hiring an experienced family divorce attorney ensures you are fully informed before making this decision and your rights are adequately protected and expertly represented in court.
Determine Future of Family Business
The first step your divorce attorney will help you with is deciding what the future of your family business after divorce. You will have to decide whether you want to continue working with your spouse, buy your spouse’s ownership interest, or if you and your spouse think it’s best, to sell the family business after divorce.
Assess Value
Regardless of what you decide to do with your family business after divorce, you need to establish your business’s value. Determining the value helps in determining the share of the business that each spouse owns.
Often, the spouse that wishes to retain the family business after divorce will value the business lower than the spouse who wants to be bought out or receive income. Hiring a family divorce attorney can help you find the right professional to value your business. These professionals include a CPA, an appraiser, or a commercial business broker.
Consider Your Options
You will need to weigh your options and what decision is in the best interest of your family business after divorce. If one partner has primarily run the business, suddenly making the non-business spouse a partner can impact the business negatively.
It is possible that the company has little to no equity that allows one spouse to buy out the other, or the non-business spouse could start interfering in the operation of the business. Your family divorce attorney will help you determine if these situations apply to your situation and how to negotiate for the best interest of the business.
Working Together
There are several options if you and your spouse decide to continue working together. This is the best option for the business because it keeps the operation consistent. A decision to work together is best if you and your spouse are amicable and able to effectively communicate.
Bring in New Partner
Bringing in a third neutral party is sometimes the best option for keeping any animosity to a minimum. A third party can help with rational and reasonable business decisions when the ex-spouses are unable to reach an agreement as well as mediate any large business decisions.
Create New Operating Agreement
If you are going to continue to work together, it is imperative that a new operating agreement is drafted. This is an important step because the operating agreement will clearly outline each spouse’s role in the business, responsibilities, business operations, and solutions.
Work in Different Departments of the Business
Most of the time, spouses begin a company and run different departments based on their business strengths. While one partner may be strong in administrative and day-to-day operations, the other partner may be better at bigger picture decisions, business-to-business relations, and new projects.
Silent Partner Option
You and your spouse can continue to own the business together with one spouse acting as the “silent partner.” This means the non-business spouse continues to own a percentage of the company and continues to receive income, while the spouse operating the business makes all the decisions and conducts the overall operation of the business.
Buyout
All family divorce attorneys will recommend a buyout agreement when couples start a business together. This is where the value of the business is most important. Adequately valuing the business will ensure that the buyout is fair, either using equity in the company, personal funds, or other assets for an equal exchange.
Selling Your Business
The last possible option is to sell the business because it is in the best interest for you and your spouse as well as the business. Again, the appraisal of the business is important in this step.
Remember, if you choose to sell your business, you will have to continue working with your spouse until it sells. This process can take months, and your family divorce attorney will remind you that the continued smooth operation of the business is best, because if the business starts suffering, the value of the business decreases.
Initial Consultation with a Tulsa Divorce Attorney
Meeting with a Tulsa family divorce attorney can walk you through the entire divorce process, as well as expertly explain how to choose a successful option for your family business after divorce.
Contact an experienced Tulsa divorce attorney when you need to go through the Oklahoma divorce process.
For a low-cost confidential consultation, call now: (918) 924-5526.