How Does a Joint-Owned Business Get Divided in a Divorce?

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What Ownership Could Cost You

Owning a business can be a stressful yet rewarding experience, but if your marriage dissolves and ends in a divorce, then there may be a new level of stress attached to your business ownership. If you or your spouse own a business and you get a divorce, what happens to that business? Here is what you should know.

Outlying Factors Such as Property Type and Agreements

One of the key factors to determine whether or not your business is up for grabs in asset division is whether or not the business was started or acquired when you were married or was inherited through special circumstances. If you or your spouse started or purchased the business while you were married or if your spouse can stake a claim to the business based on involvement or financial contribution, then it is likely that your business might be available in the asset division.

In addition, if you and your spouse have a marital agreement in place, either prenuptial or postnuptial, this could have an impact on what happens to the business provided that the business is included in the agreement. It can be common for business owners to lay out what happens to that business in the event that they get a divorce in order to protect that asset and prevent future problems in the divorce.

Accurately Value the Business

Should it be determined that the business will be divided, then it is important to get an accurate value set for the business. The court will want to see documentation that proves what the business is worth, and for this reason, it would be wise to seek out an expert that can determine the value of your business.

Determining the value of your business can be done through three different approaches:

  • An income-based approach combines past success with current income to determine future projections and, ultimately, the profitability of the business.

  • An asset-based approach focuses on the current assets a company has at the time, both tangible and intangible.

  • A market-based approach examines the current selling price of similar-sized businesses to determine what your business could potentially sell for and, therefore, what it would be worth.

Regardless of the method used, having documentation to prove this value is essential.

Crafting an Argument

Once valued, it then becomes important to prepare an argument for why you should retain the business over your spouse in the event that a judge ultimately decides the fate of your business. You may have time to have your attorney negotiate a settlement, such as buying out the spouse’s share of the business or providing other assets of value equal to the business, but regardless, it is important to have a plan going forward.

Contact the Law Offices of Jonathan Merel, P.C. Today!

Throughout the entirety of this process, it is crucial to have an attorney by your side as you work out issues related to your business. At Law Offices of Jonathan Merel, P.C., we understand how important it is to keep the business that you’ve invested so much in. We are committed to finding creative solutions to help you end up with the best possible outcome.


To schedule a consultation, call our office at (312) 487-2795 or visit us online.

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