Divorce can be a challenging time, especially when you and your spouse are joint owners of a family business. Many fear that the end of a marriage will inevitably lead to the downfall of their business. However, with the right approach, it’s possible to maintain a thriving business relationship even as personal circumstances change. This guide explores how couples can protect their family businesses during and after divorce, ensuring continued success and stability.
Protecting Family Businesses from Divorce
Many people fear that divorce will spell the end of their family business, but this is often not the case. In fact, many couples who own businesses together manage to find common ground to keep their enterprises running even after separation.
Navigating a Copreneurial Relationship Post-Divorce
In a copreneurial business relationship, married couples are joint business partners. Divorce or separation can strain this relationship, but it doesn’t have to lead to its collapse. The key lies in shifting the focus to a business-oriented perspective, where trust and loyalty are redefined to serve the company’s best interests.
Even if personal trust has eroded, maintaining a professional trust in business decisions can keep the family business thriving. Couples who can separate personal issues from professional ones often find that their business relationship remains profitable and productive.
Handling the Impact on Children and Extended Family
Divorce in a family business can also raise concerns about the effects on children and extended family members. Often, these family members struggle to distinguish between the couple's roles as individuals and as business partners. Establishing clear boundaries, defining roles, and demonstrating commitment to the business can alleviate some of these concerns and maintain family harmony.
Ensuring Financial Stability and Business Continuity
As the marriage dissolves, it’s crucial to clarify each person’s role in the business and manage conflicts professionally. Mutual respect in business dealings can ensure that the company continues to flourish. Consulting a financial planner early in the divorce process is also essential to protect financial interests and plan for the future of the business.
Selling a Family Business: Maximizing Value
When selling a family business, it’s vital to maximize the sale price by considering all potential buyers, not just the first unsolicited offer. Family business owners often make the mistake of negotiating with only one buyer, limiting their bargaining power and potentially leaving money on the table.
Conducting an Effective Auction
Auctions generally yield the highest sale prices for businesses. To attract bidders, it’s important to assure them that the business will be sold to the highest bidder in a fair and transparent process. Whether it’s a controlled auction with selected buyers or an open auction with no restrictions, the process should be managed by a trusted professional, such as an investment banker or attorney, to ensure all bids are handled fairly and confidentially.
Finalizing the Sale
To make the auction process meaningful, sellers should provide all bidders with the same agreement of sale and require a forfeitable deposit upon signing. This helps ensure that the high bidder is serious and prevents delays that could cause other bidders to lose interest. A quick closing after the auction is essential to finalize the sale and move forward successfully.
Copreneurial Business Success After Divorce
Despite the challenges of divorce, many couples successfully navigate the transition by establishing professional boundaries, securing financial stability, and maintaining mutual respect in their business dealings. By focusing on the business’s success, they can ensure that their copreneurial relationship remains strong and profitable.
Conclusion
Divorce doesn't have to spell the end of your family business. By establishing clear professional boundaries, maintaining trust in business decisions, and seeking expert financial advice, you can ensure your copreneurial venture remains profitable and resilient. With the right strategies in place, your business can continue to flourish, even as your personal relationship evolves.
