Sharing a Family Business After Divorce in DuPage County

 Posted on December 15, 2022 in Divorce

Divorce can be difficult, but when splitting, selling, or liquidating a family business, divorce can be all the more emotionally overwhelming, costly, and prolonged. According to the Harvard Business Review, 70 percent of family businesses are either sold or go bankrupt before they can be passed down to a second generation. Even if a family business was inherited, dividing a family business in a divorce typically entails complex asset division as the marital assets could be commingled. If the divorce is acrimonious, for peace of mind, many divorcing spouses would rather sell their stake to one another or sell the business altogether.

There are circumstances where it may be judicious to maintain and share a family business. For instance, if the divorcing spouses had created the family business together or if the family business is the family's sole income, it might be wise to sustain a professional relationship and carry on with the business. A family law attorney can help recruit professionals to evaluate a family business's worth and strategize for reasonable solutions in the client's best interest.

Seven Reasons to Share a Family Business

A divorcing couple may wish for family business continuity for many reasons. Some reasons could include the following.

• The divorcing spouses created and built the family business together

• The divorcing spouses wish to pass their family business down to their children and not any children they may have with new spouses

• The divorcing spouses would rather share the business than contend with complex property division

• The worth of a family business is less than the divorcing spouses had anticipated, and therefore it may not be advisable to sell

• In due time, it is foreseeable that the business valuation will increase

• The highly regarded personal goodwill of the business’s reputation, known as business goodwill, is equally intertwined between spouses

• The family business is the sole source of income for the family

Seven Reasons to Split a Family Business

For a myriad of reasons, a divorcing couple may wish to divide and sell their family business, which could include some of the following.

• The divorce was too acrimonious for each party to maintain a personal, let alone professional, relationship

• The divorcing spouses do not have a successor to take over the family business

• The infighting between likely successors is too unbearable for an amicable resolution

• A marital agreement, which could include either a postnuptial or prenuptial agreement, unambiguously stipulates how to handle the family business in the event of a divorce

• One spouse inherited the family business, and both parties believe it should remain on that side of the family

• The business valuation is favorable and it is, therefore, advisable to sell

• The business valuation is worth more liquidating than maintaining

Contact a DuPage County Divorce Attorney

At Pesce Law Group P.C., a full-service family law firm, our determined and passionate lawyers understand the emotional and financial attachment clients may have to their family business. Our firm provides knowledgeable counsel and business valuation and strives for effective results. We advise and advocate for our divorcing clients who own family businesses and always endeavor to mitigate acrimony. If you are divorcing yet still want to maintain your family business, contact a Naperville divorce attorney at 630-352-2240 for a free consultation.

Sources:

https://hbr.org/2012/01/avoid-the-traps-that-can-destroy-family-businesses

https://www.ilga.gov/legislation/ilcs/ilcs4.asp?DocName=075000050HPt.+V&ActID=2086&ChapterID=59&SeqStart=6100000&SeqEnd=8350000