If you own a business in San Antonio and are considering divorce, it’s important to know how to divide the business without destroying it.
A collaborative approach is key to reassuring shareholders and employees, maintaining confidentiality of your financial, family and business affairs, and working toward a smooth transition of ownership during a divorce.
Usually, the owner will engage a business evaluator to develop a formal valuation of the business based on accepted methods such as discounted cash flow, similar business sales, and book value of the business. Business valuations involve subjective judgments and the non-owner spouse may not accept the owner’s valuation and instead hire her own expert to produce a second opinion of the value of the business. If this happens, the family is in the difficult position of funding two competing expert valuations of the business and the cost can grow quickly as they defend their varying methods and results. If the parties reach an impasse about the value of the business and go to court to decide the issue, the financial affairs of the family become public knowledge.
Paying the Ex-Spouse
Once they reach an agreement about the valuation of the business or the issue is decided by a court, the next problem is how to pay half the value of the business to the ex-spouse. Generally, the owner will want to make payments from other liquid assets rather than transferring significant shares to his or her spouse, which would give the ex-spouse part ownership of the business with the potential conflicts co-ownership might entail. Often, its necessary to make the pay-out in installments over a number of years to minimize financial stresses on the business. Usually the ex-spouse will need some guarantee that he or she will actually be paid. This can be done by giving the ex-spouse a note, a lien on the business, or the family home as collateral for the debt.
If both spouses are shareholders in the business or have important management roles in the enterprise, the potential for disruption or significant damage to the business is high if the couple become adversaries. Co-owner spouses need to work together to create a smooth transition of power and reassignment of responsibilities within the company to minimize any negative financial impact on the share price, business management, and employees. In this case, it’s particularly important for the San Antonio couple to choose a collaborative divorce to minimize damage to the business.
Most business owners and their spouses want to keep their financial affairs out of the public eye through a non-court procedure such as the collaborative process, which guarantees confidentiality during the divorce. Within the collaborative process, a business owner can keep his family affairs, trade secrets, and business strategies totally confidential. Mediation or the collaborative divorce process allows the family to keep all their business and family matters out of the public eye. The collaborative divorce process also allows them to maintain control of the outcome because they manage the settlement negotiations and make all decisions about the outcome of the divorce rather than leaving these decisions in the hands of a judge or jury.
Divorcing is Difficult
Getting a divorce is perhaps the most difficult personal decision a business owner will ever make. To minimize damage to the business and maintain privacy, the collaborative divorce process is the optimum way to untie the knot and divide the business with minimal damage. With the well-being of many employees, the future of the business, and so much money at stake, it makes good sense to opt for a confidential collaborative divorce if you own a San Antonio business and are untying the knot.