Divorce proof your family-owned business

Splitting assets after a nasty breakup can be a difficult task to mitigate. Companies are renowned for having contingency plans and preparing for all possible outcomes but admittedly divorce is hardly ever prepared for. However it is not all doom and gloom, with the proper preparation beforehand certain situations can be avoided.

Think about the statistics and it all seems to make a lot more sense. 50% of marriages end in divorce, chances are your business could be one of them. It’s not something most couple want to think about far less even consider but the statistics do not lie, take this example: In a family-owned company with four shareholders, each of whom has a 50 percent chance of divorce, this means there’s a greater than 90 percent probability the company will encounter a shareholder divorce.

The process itself can seem tedious and company valuations can differ greatly across the board. It would be prudent to spend the time to talk about this potential situation with your spouse. If two are really committed to the business it should not seem so out of place. Here the old adage “it’s better to be safe than sorry,” rings true for both parties involved.

Companies embroiled in divorce are usually caught with their pants down, so to speak when issues like divorce rears its heads. One of the chief problems tend to be company valuation which tends to waver depending on the lawyer.

With widely differing valuations there is a huge risk that the court can make certain errors in terms of stock valuation.

Regardless these are just a couple of things to keep in mind as you go about attempting to manage this difficult situation. So prepare now so you and your spouse don’t have to attempt to fix it later down the line.

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