The Business You Built Together: Splitting a Family Enterprise Without Destroying It

For many couples the business is their single biggest asset and their main source of income. That makes it both the hardest thing to divide and the most important to get right, because a business torn in half usually dies, taking everyone's livelihood with it, the children's included.

A business is an asset to be shared

Like the home, a business built up during the marriage is part of the assets of the spouses and falls to be divided on divorce. And as with the home, what matters is contribution, not just whose name is on the registration. A spouse who helped run the business, kept its books, served its customers or held the home together so it could grow has a real claim, even without a share certificate. See Dividing the Matrimonial Home.

Four ways to divide a business

1. One spouse buys the other out. One keeps and runs the business and pays the other for their share, in a lump sum or in instalments. Often the cleanest outcome where one spouse is the active operator.
2. Trade it against other assets. One keeps the business while the other takes matching value elsewhere, such as the house or a pension. See The Assets Couples Forget to Divide.
3. Sell and split. The business is sold and the proceeds shared. Sometimes necessary, but it can destroy value and end the income, so it is usually a last resort.
4. Carry on as partners. The spouses keep the business jointly under a clear written agreement. It rarely survives a bitter divorce, so it needs genuine goodwill and tight terms.

The real battleground is valuation

Most business disputes are really fights about what the business is worth. One spouse may suddenly make it look worthless, hiding income or stripping assets just before the divorce. A fair split depends on an honest valuation. See The Spouse Who Hid the Assets.

Keep it alive with a calmer process

A collaborative approach is often the only way to divide a business without killing it, because it lets the spouses protect the enterprise and the people who depend on it rather than fight it into the ground. See What Is Collaborative Divorce.