Protecting your business
What comes first?
There are usually a lot of questions that you need to think through upfront. It may be overwhelming at first, so consider whether you have a business partner/trusted friend who can step in to run the business in the short term (even for a few hours a week to give you the time you need to work through this period).
It might also be useful to seek out friends/colleagues that have been through a divorce/separation while running a business for their advice. Understanding your legal, financial and risk position are usually great first steps. Consider referring to the separation checklist for further information.
If you work with your ex-spouse, then it is worth having a conversation and agreeing upon your respective roles in the business. If, whether and how you plan to sell the business or buy out the other partner, you will need to discuss and negotiate these options.
What comes next?
Once you have the makings of a plan in place, it’s time to put it into action. Seek feedback from trusted friends to ensure you have covered all your bases, and if you are in any doubt about anything, seek expert advice.
An absolute understanding of your legal obligations, particularly as they relate to loans, tax, guarantees and trust arrangements for the business is of vital importance. It could be helpful having a 'round table' meeting with your family lawyer, commercial lawyer, accountant and other professionals involved in your divorce and business.
Divorce/Separation proceedings can take a long time. Making sure you well set up to ensure that money continues to keep coming through the door at a rate which will cover all of your obligations will help to ease any additional stress or strain.
Do you need to arrange a business valuation?
If your business is growing, you may need to have an independent valuer put a price upon your business and you will need this figure in your financial negotiations. As the success of your business changes, this figure will need to be reflected in its valuation.
Are you the sole shareholder?
Even though you may have the entire share-holding for the business, you may have to ‘pay out’ or distribute shares to your ex-spouse. Just because assets may be in one person’s name, it doesn’t disqualify your ex-partner making a claim upon those assets.
What comes later?
Following the completion of divorce proceedings, take the time to pause and reflect on the future. Does the plan that you put in place initially still make sense? What pathways could your business take, and do they now align more closely to what you seek?
Many people see divorce as an opportunity to reset their personal life, but it can also be an opportune time to plot a new path for your business. In the event that the legal structure of your business changes post-divorce (e.g. partnership to sole trader), make sure you are fully informed about your obligations.