Keeping Your Business Alive After Divorce
The family law attorneys at Rodier Family Law give insight on maintaining a business when an entrepreneurial couple gets divorced.
Spouses spend years building and developing a business. But, when a couple decides that their marriage is no longer viable, the business they worked so hard to develop must be divided, or the couple must decide how to continue operations post-divorce. Tensions rise and negotiations can be difficult when business assets are involved, as each spouse has their own interest in the business. One spouse may want a larger share of the company to soothe bad feelings, while the other may be defensive about the business’s finances and refuse to cooperate. Further, old resentments about how the business was managed over the years can rise to the surface, making the whole process unpleasant.
When situations such as these arise, spouses can be left feeling emotionally drained, and the business no longer remains a top priority. Yet, this doesn’t have to happen. Though it is impossible to take all of the emotions out of the equation, there are different approaches that spouses can take to ensure their business has a real chance at withstanding a divorce.
Treat each other as if you were strangers
Looking at the business relationship as if you are “strangers” requires that you define every aspect of the business, even the unpleasant topics such as buy-outs and succession planning. This can be tough, not because most people do not want to think about it, but because many couples run a shared business informally, negotiating who does what in the same manner that they figure out who does familial chores.
Dividing up jobs is one thing, but figuring out how to divide a company after a split is another. There should be a clear plan in place to avoid conflict. Even if a couple thinks that they will be able to work together after a divorce, there is no guarantee that the same emotions that led to their split won’t interfere with their working relationship.
Plan to start a new career
Often, when most couples make the decision to split, they have not yet considered a plan for their business. While this is easier-said-than-done, it is recommended that both parties keep their emotions at bay when negotiating business assets, to the best of their abilities.
Aside from emotional preparation, there is another issue to consider: What is the next step for the spouse who decides leaves the company? If the spouse remains in the same field, things may get complicated. Even if the couple tries to divide customers evenly, there may be some who feel more aligned with the couple as a whole and may choose to do business elsewhere. Couples can quickly become competitors, even if they have the best intentions.
Reinvent the relationship
A common business goal is to have a shared vision of how daily operations should be managed. Yet after divorce many people find that they need an entirely new way of working. For example, an amicable divorce may be based on a breach of the trust that was defined by the couple’s marriage. If both partners choose to remain involved in a business, the couple must face this issue head on and change
their work habits in order to run the venture successfully. Ex-spouses should explicitly define the boundaries of their business relationship, and create a separation between personal issues and business matters.
Be aware of emotional triggers
Conflict is inevitable in any business, but it is even more likely when the partners have been through a divorce. Couples who choose to run their business together after divorce should work on creating “detriggering” techniques that can help reduce conflict. These techniques can consist of something as simple as a phrase to help avoid an argument before it begins, or more involved methods of circumventing conflict. In order to work together successfully after divorce, couples should focus on maintaining mature, respectful communications.
Regardless of the possible difficulties, divorced couples who are able to make their business the main priority often form healthy business relationships that allow the business to thrive whether or not they choose to operate together.
For more information on divorcing while owning a business with your spouse, or if you have questions regarding your individual situation, contact the family law attorneys at Rodier Family Law.
The content of this article is intended to provide a general guide about the subject matter. A licensed Maryland attorney should be sought about your specific circumstances.