How is the family business handled in divorce mediation?

 Posted on April 16, 2018 in Divorce Mediation

Perhaps you and your spouse are facing divorce and have agreed that mediation is a much better solution than going through a traditional court proceeding.

You have already reached agreement on your own about the division of certain assets. However, you have issues over what happens to the family business. Can mediation help?

The largest asset

For most divorcing couples, the marital home is the largest asset. In your case, the family business probably holds that honor. Both you and your spouse may be invested in the business financially, but you may also be emotionally attached to it. An experienced mediator will help you review the options. For example, one of you might buy out the other. You might also consider continuing on as co-owners, but that would require being able to maintain open communication. Could you do that?

Common fears

Small businesses usually do not employ Generally Accepted Accounting Principles in keeping their books. If your spouse is in charge of bookkeeping matters, you may be concerned about what kind of surprises an examination would turn up. However, the amount you receive for child support-and indeed, your own financial future-will depend on the findings when an independent accounting professional opens the books in connection with your divorce.

Valuation

You and your spouse may disagree about how much the family business is worth. Your mediator may call in an outside expert to assist in determining a fair value.

Final options

Once you have established the value of the family business, it will be time to review options. Is there enough money for a buyout? If the business stays open, will there be enough revenue for making monthly support payments? Can the business be operated successfully if one of you leaves? Would it be better to just close the doors?

With the assistance of outside resources, your mediator will ensure that both you and your spouse understand the impact the divorce will have on your family business so you can make an informed decision concerning its continuing operation or the necessity of winding down.