In 2014, Forbes reported that at least 1.2 million husband-and-wife teams were running companies in the U.S., and that the number of family businesses was, statistically, likely to be much higher than that. The Centers for Disease Control and Prevention reported, in March of 2017, that just shy of half of all couples end up divorcing. It is safe to assume, then, that at least some husband-and-wife business owners will end up divorcing as well. If you and your spouse own a business together, it is in your best interest to consider divorce mediation, as opposed to litigation, as a way to preserve not only your own peace of mind, but your business as well.
Mediation takes place when both spouses are equipped to find a reasonable and equitable resolution to the division of their assets, and can be quite successful—even when a family business is at stake. At Divorce Mediation Associates, Ltd., we have experience with dividing assets so that your family business does not have to close.
Creating options for Northern Virginia business owners seeking a divorce
Every divorce mediation process is different, but with the shared goal of fairness and equitable distribution of assets, your family business may not have to be split down the middle or close its doors. In some instances, one spouse will elect to take over assets equal to their share of your co-owned company—to be bought out. If each spouse has a 50% stake in the business, circumstances often include one party being bought out completely, or maintaining a share of business profits with no managerial rights to the company. If neither spouse wants to forgo their stake in a family business, mediation can be the best option for generating a workable solution. In fact, some divorced couples find that their businesses thrive after the dissolution of the marriage.
In short, what divorce mediation offers is the chance to create a solution that is innovative and in line with your business’s best interests, as well as yours. Divorce mediation is more flexible than traditional methods of litigation, and allows you more freedom in determining how you wish to proceed.
Flexible mediators can help you find a solution
Most people seeking divorce do not also want to shutter their business, even if it was acquired or started with their soon-to-be-former spouse. A flexible mediator with professional experience in negotiating divorce terms within a family business can help both sides achieve their goals, or at least find a workable compromise.
There are, however, some potential problems that are unique to family-owned businesses. Some issues that commonly arise in divorce mediations involving a family business are:
- Lack of paperwork. Unfortunately, many family businesses are begun on handshake agreements. Both parties should understand what contractual obligations have been established, if any.
- Effective lines of communication. Typically, a couple that will reasonably communicate can voice their concerns about business interests, and might even be able to continue working together. If communication has broken down past a certain point, however, it can be very difficult for a couple to continue running their business in partnership.
- Separation of Powers. If both spouses are intent on working at the company that they own together, difficulties can arise when deciding on which spouse will take on what duties. A flexible and experienced mediator can compassionately help couples designate roles.
- Loss of future income. If one party is being bought out of the business, mediators will need to assist in calculating how couples can make up for the loss of future income of one of the parties. If the business was acquired during the marriage, there will need to be an equitable distribution going forward.
Divorce Mediation Associates, Ltd. is a trusted mediation team that has a reputation for guiding divorcing couples to functional solutions for all parties. Your business does not have to suffer because of your divorce, and we have the experience you need to help you achieve this goal. Please do not hesitate to contact us for answers to your questions. Learn how divorce mediation might be the right choice for your family business by calling us at 703-665-7592 or using our contact form.