Split a Business or Operate it Together After Divorce?

 Posted on August 15, 2024 in Asset Division

Statistics indicate that divorce among business owners is between 43 and 48 percent, although that number increases when spouses own separate businesses. Since the divorce rate is hovering at around 42 percent across the nation right now, those numbers indicate that business owners may be slightly more likely to divorce. Divorce is difficult under most circumstances, but it can certainly be more problematic when complex issues are involved.

When a couple owns a business together and then decides to divorce, the decision of whether to continue operating the business together, split it, or sell it can add another layer of complexity to an already tense situation. If the business is important to both spouses on a financial and even emotional level, it can be tough to decide how to proceed.

If you are considering divorce and you and your spouse have a thriving business together, it is essential that you speak to a knowledgeable divorce lawyer with experience in business valuation and division. When you choose a Wheaton, IL complex asset divorce attorney from Andrew Cores Family Law Group, you have taken an important first step toward a positive resolution.

Why Would Divorce Be More Common Among Couples with a Business?

While there are myriad reasons for a divorce, and every couple’s divorce is unique to their situation, some reasons spouses with a business may be more likely to divorce include:

• Starting and growing a new business is all-consuming, possibly leading to neglect of the marriage.
• Running a business requires a significant investment of capital, particularly in the beginning, often resulting in financial issues for the family.
• Spouses may have very different visions for the direction the business should take.
• Running any business is stressful, which only adds to the stress of marital issues that are already present.

If a business belongs to one spouse, the division may be simpler in many ways. The non-business-owning spouse can have the other buy him or her out as part of the asset division. When a business is started by both spouses, and both work at the business, the issue is more difficult. One spouse can buy the other out, but deciding which one gets to keep the business can get contentious.

In some cases, couples who are divorcing but generally make good business partners may decide to continue running the business together after the divorce. While this might make the best sense financially, it may not be a practical solution for spouses who cannot stand to be in the same room together. If the decision is to sell the business and split the profit or for one spouse to buy the other’s interest in the business, a valuation will be necessary.

What is a Business Valuation?

Business valuations are much more complex than determining the worth of the marital home, which can often be done through comparable home sales in the neighborhood. Business valuations require a detailed analysis of the business. Under Illinois state law, business assets are determined according to fair market value. While this sounds fairly straightforward, an intangible asset of any business is known as business "goodwill." Over time, businesses develop a reputation, brand loyalty, intellectual property, skilled employees, and more. If all these intangibles are positive, they increase the value of a business.

Contact an Experienced DuPage County, IL Complex Divorce Attorney

If the assets in your divorce are not straightforward and a business must be dealt with, you need an attorney who is knowledgeable about complex divorce issues. As we develop a case strategy for you, we keep your goals in mind. You will be pleased to find that we stay in close communication with you throughout the divorce process to ensure we obtain the positive results you are looking for. Contact a Wheaton, IL complex divorce attorney from Andrew Cores Family Law Group at [[page]] to schedule a free consultation.