If you own a business and are considering divorce in Colorado, your situation is likely more complicated than a divorce that involves two people with no business interests to consider. You’ll likely have some tough decisions to make, such as whether you want to continue running the business. If you choose to sell your business, you may have to pay off any debts the business owes, liquidate your business interests, and divide the proceeds from the sale.
The divorce attorneys of Halligan LLC have the experience necessary to assist with even the most complex of divorce cases. Our team understands the complexities that arise when dealing with a business and divorce, and we have access to the right financial experts who can help us determine fair market value for your interests in the company.
If you or your spouse owns a business and you are considering getting a divorce, call us at (720) 608-2361 to schedule a confidential consultation to discuss how we can help you. Together, we’ll work to find the right solution for your specific situation.
Selling a Business in a Divorce
Colorado follows what is known as an equitable distribution when it comes to dividing marital assets, which means that the courts will look at a variety of factors and then divide marital property and assets fairly. This process is often easiest if the couple does not have a lot of complex or diverse assets, and things become more complicated when there is a business involved.
There are multiple ways that spouses might decide to settle the matter of business ownership in a divorce. Interest in a business is often considered a marital asset in the allocation of marital property during a divorce.
If both spouses own and operate the business, it may be possible to continue to co-own the business after the divorce. In other circumstances, the couple might decide that one spouse will take control of the business and buy out the other spouse’s share of the business.
Another option for co-owned business interests is to sell the business and divide the proceeds equitably between the spouses. This option has benefits and drawbacks. This could be a good course of action if the business is no longer profitable, neither of you has any interest in running the company any longer now that you’re divorcing, or you or your spouse are nearing retirement age.
However, this option can have multiple complications as well. If one spouse wants to continue running the business, then they likely will not agree to sell it outright. Additionally, this process might take a while, especially if the market for your type of business is not doing well. You might be forced to sell the business at an unfavorable price, or if you decide to wait for the right price, you might have to continue dealing with your ex for longer than you would prefer.
What Does Selling My Business Mean?
The decision to sell your business in the midst of a divorce is incredibly personal and often emotional. You might have fought hard to start the business from the ground up, or you might have inherited the business and continued its mission as a way to honor your family’s legacy. Selling a business often means that you give up control of the company. You might even have to find another job where you report to someone instead of being the boss and having full control.
Before you agree to grab a “for sale” sign, stop and think about why you want to sell in the first place. It can backfire if you are only agreeing to sell the business in the midst of your divorce settlement because you don’t want your spouse to get any portion of the business or its profits. If the court considers the business to be a marital asset, then your spouse might get some compensation for the sale. Additionally, if you try to quickly sell off the business before the divorce in an effort to shield the asset from your spouse, then the court might think you’re trying to hide and/or dissipate assets and enter orders against you for doing so.
What becomes clear is that you need an experienced attorney who understands the ins and outs of family law and all the possible options and challenges that come with selling a business. A lawyer will be able to discuss all your options and go over solutions to your most challenging questions.
Frequently Asked Questions
I owned my business before I married, so I can sell without worry, right?
If your partner invested money into the business during your marriage, or there was an increase in income from the business over the course of the marriage, that value may be subject to division in the event of a divorce. In some instances, the money that you receive from the sale would be considered an asset and may be subject to division as well.
How long will it take to sell my business?
That can depend on the type and nature of the business itself. A more obscure or specialized type of business can end up taking years to sell. The timetable may also depend on whether the spouses can agree on the price and the buyer. Economic factors such as a downturn in the market may also drag out the length of a sale.
Can I avoid a formal business valuation if my spouse and I both agree on a price?
Whether you can avoid a business valuation greatly depends on the type of business that you own. If you are a sole proprietor or self-employed, then you might be able to proceed without an official valuation. However, for more complicated business, a formal valuation is critical to helping ensure you get a fair price for your business, properly address tax issues, and protecting your future interests.
How Can an Attorney With Halligan LLC Help My Business and Me?
You are left in a position of influx. Your marriage is coming to an end, and maybe your business as well if you are considering selling it. Those are a lot of changes to digest in a short amount of time. Your world is not the same as it was just yesterday. At Halligan LLC we know that this is a difficult and emotional time for you and your family. That’s why we pride ourselves in offering compassionate and supportive legal advice during your time of need.
Call Halligan at (720) 608-2361 to schedule a free consultation. We have the resources to connect you with professionals that can establish the value of your business fairly and accurately. We can help you assess all your possible options and help you determine the best course of action for you.