3 ways to divide a business in a divorce

On Behalf of | Aug 31, 2023 | Divorce |

Dividing a business during a divorce can be a complex and sensitive process. Splitting your assets and responsibilities requires careful consideration and communication on both sides.

There are three common methods you can explore to divide a business if you are a business owner facing such circumstances.

1. Equitable distribution of shares

New Hampshire is an equitable distribution state, so one approach is to fairly distribute the ownership shares of the business between you and your former partner. This means both of you have a stake in the company’s decisions and profits. To implement this method, you’ll need to assess the overall value of the business and then assign ownership percentages. This may involve granting more shares to the spouse who is more involved in the business’s day-to-day operations or who has contributed more to its growth.

2. Operational split

In this scenario, you and your spouse divide the responsibilities of running the business. You may decide that one of you takes charge of the production and operations while the other focuses on marketing and administration. Using this option, both parties can continue to contribute their skills and expertise to the business without interference from each other.

3. Sell and divide

If maintaining joint ownership or operation is not an option due to personal differences or business complexities, selling the business may be the better choice. You can agree to put the business on the market and divide the proceeds from the sale in a way that you both find equitable. This approach offers a clean break and allows both of you to move forward independently. However, selling a business takes time, and market conditions can impact the sale price.

According to some studies, the divorce rate among business owners may be as high as 48%. Navigating the division of a business during a divorce requires thoughtful consideration and a focus on finding a fair solution. The goal is to reach an agreement that allows you both to move forward and pursue your separate paths with a sense of financial stability and closure.