Buying out your ex’s half of the family business

On Behalf of | Apr 29, 2020 | High Asset Divorce

For divorcing couples who share ownership of a family business, the end of their marriage also means they face a difficult decision regarding the future of their business. 

With how high tensions can be, it’s understandable that many divorcing couples decide not to continue sharing the operations of their business. Often, they decide it would be easier for one ex-spouse to buy out the other’s interest in the business, especially if one of them wants to keep the business, and the other just want to move on with their life.

First, that requires the divorcing couple to have the value of the business accessed. Most likely, this is accomplished through hiring an independent party to conduct the valuation. So for example, if the business is accessed to be worth $1 million, then the ex-spouse who wants the business would have to pay $500,00 to the other to buy out their share.

Once the divorcees inspect the third-party results and agree on the fair market value of the business, then one ex-spouse can start the process of buying out the other. This can be done in one lump sum or strung out over many smaller payments as agreed upon in the divorce settlement. A buyout can get complicated if there aren’t enough liquid assets, such as cash, stocks or bonds to readily make the payment. In that case, the ex-spouse may have to borrow money or the divorcing couple may need to agree on a different asset division in lieu of cash, such as one of them getting to keep the house, which counts toward their value of the business.

The division of assets in a divorce can be extremely complicated even if you don’t have a business to think about. Having experienced Texas legal counsel to explain your options, mediate and fight on your behalf can help you keep control of many of the assets that mean the most to you, such as your business.