Bringing private matters into the workplace is generally frowned upon. Maintaining a professional facade is a must, but there are some scenarios where this isn’t always possible. If there are marital issues such as divorce to deal with, some businesses are more likely to be affected, namely SMEs, family-run companies and partnerships.
When divorce is on the horizon, there are all kinds of issues to navigate where the business is concerned. Divorce affected around 111,000 couples in England and Wales, with a small proportion running family businesses together. The legal implications of divorce are complicated enough without bringing the fate of a family business into proceedings.
Dividing it Up
For divorcing couples who run a business together, working alongside one another is not a viable option. Regardless of the reason for divorce, getting out of a family business or partnership is seen as paramount in order for one divorcee to move on. This would require plenty of work, much of which can be handled by a divorce law specialist.
After hiring a lawyer/solicitor, taking stock of the company’s assets and how much they are worth is the next step. To do this, get an independent auditor to value the company and work out how much of it and its assets are owned by the divorcee. Next, the right thing to do is look at dividing up the business.
Knowing who is entitled to what is the trickiest task of all. To avoid conflict that could risk damaging the entire family business or partnership, consider the following solutions:
- Persuading the divorcee to sell on their stake in exchange for cash
- If the divorcee is an employee rather than a shareholder, offer some form of redundancy payment as a “golden goodbye”
- Look at agreeing a settlement before going to court
Should none of those be possible because of disagreements, the next ‘divorce’ – leaving the family business – will have to be settled in a court. Settlements are often agreed where the divorcee gets at least a small proportion of the business’s worth. However, there are instances where the business owner gets most or even all of the assets.
While all of this is going on, the day-to-day operations of family businesses/partnerships take a back seat. The longer a divorce process drags on, the more detrimental it could be to a business. Any downturn in business could ultimately impact on the amount awarded for settlements.