How to protect your business in the event of a divorce

As a business owner, it is almost a certainty that you will face hardships, whether this is due to a dip in revenue, a drastic change within your respected market, or an economic recession. One of the most challenging obstacles a business owner can face is going through a divorce. Not only will there be a level of emotional turmoil that will have to be dealt with alongside running the business, but there is also the risk of the business being compromised and torn apart during the divorce settlement. It’s important to consider the possibility of this whilst starting a business with your partner, and taking precautions to minimise any potential damage it may cause.

In the event of a divorce, you will need to begin to consider factors such as the amount of income your ex partner is receiving from the business and how much they will lose, as this will be scrutinised by the judge when deciding on a fair settlement. When factoring a business into a divorce, all decisions need to be carefully calculated and made in the best interest of both parties involved. It’s a common misconception that a business has to be compromised during a divorce, when there are in fact other options to explore.

Planning ahead

After you have decided to get a divorce, it’s a good idea to explore all of your options before making a decision. The things you need to consider are:

● Getting a prenuptial agreement - this may of course be too late, but if you have thought ahead, then this can protect your business in the event of a divorce

● Keep business and private assets separate - if you keep your private assets (property, cars etc.) separate from your business, then you are likely to experience less focus on the business during the divorce

● Compromise and share ownership - whether one of you becomes a silent partner, or whether you decide to work on a rotation, there are many things you can do to compromise and have a joint ownership of a business

● Buying the other partner out - if one of the parties involved chooses to buy the other person out, then conveyancing and dispute resolution solicitors will need to be factored into the equation, in order to change the name on your commercial property and business

Get an accountant to value your business

It’s vital that you have an outside party or accountant to value your business during the event of a divorce, but this person should not be associated with the business. Anybody who is associated with yourself personally or with the business may be inclined to undervalue it to do you a favour in the long run. Only impartiality will be tolerated in the event of a divorce.

Considering the next step

Once an agreement has been settled on and all of the proceedings have taken place, it’s important to consider the future of your business. If you have retained the ownership of your business, then you will be in full control of all the decisions that are made. Having a clear structure and plan will help to reassert the stability of your business and will also help to steer clear of any turbulence that is commonplace after a divorce. Again, it may be necessary to factor in professional advice and opinions in order to set yourself on the right track to success.

Although divorce can be an unpleasant and long winded matter, it’s important to keep a level head when your business comes into question. Always consider every possible outcome before making a financial investment in a business, but if you are greeted with compromising situations, always be sure to consult with legal experts and make decisions based in the best interest of your business.

About the author:

Alexa Jones Porter is an avid writer who works closely with a conveyancing solicitors in Manchester to raise awareness for property legalities and to inform business owners on how to act in certain legal situations.