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If you have a closely-held business, do you really want to litigate your divorce?

by | Apr 30, 2021 | Business and Divorce |

Divorce is, at its core, a legal process that looks to divide intermingled financial assets. Sometimes, that can extend to businesses that one or both spouses hold a stake in. If you have a closely-held business and you’re involved in a divorce, it can adversely affect the relationships you have with the small circle of people running your business. That can not only create financial issues for you, it can also disrupt what for many is a safe haven during divorce. When your home life is disrupted by divorce, work can be a place that’s familiar and where you can focus on something other than your divorce.

What is a closely-held business?

Investopedia offers this defition: “A closely-held corporation, also referred to as a closed corporation, is a firm whose stock is held by a small number of people. While this may include traditional investors, it may also be held by the family members or other insiders associated with a particular business. To qualify as a publicly-traded company with closely-held status, a minimum number of shares must be held by persons outside the business, such as members of the public at large.”

A number of small businesses are set up this way. If spouses of family members are involved, they’ll sometimes be brought in as stakeholders, or might be there from the get-go. If the divorce is amicable enough, it may be possible to have the soon-to-be-ex still involved with the company. But even if the couple gets along, moving forward might include the soon-to-be-ex leaving the company as well as the marriage.

When Opposing Parties Disagree

That’s sometimes easier said than done, though. In these kinds of divorces, the soon-to-be-ex may want to continue on against the wishes of the other stakeholders, or may just see it as leverage in a contested divorce. Untangling finances is a very challenging part of divorce, especially when the couple has shared business interests.

This is where alternative dispute resolution can be incredibly helpful, both for the couple getting divorced and other stakeholders in the closely-held business. In collaborative divorce, for example, a financial neutral is used by both parties to determine assets and debts and, most importantly here, the valuation of a business. It’s not always clear what assets are worth, and those can actually be points of conflict in a divorce.

The financial neutral comes to a valuation that all parties utilize, but that’s not all it does. That person is part of a team geared toward a solution that works for both people in the divorce, and will look at the entire spectrum of assets a couple has. Collaborative divorce allows for creative solutions in which each person can get what he, she or they value most in a settlement, and looks to help people move beyond the divorce rather than stay mired in it.

Collaborative Divorce vs. Litigation

Some divorces have to be settled via litigation; there are no two ways around that. However, some couples find that collaborative divorce or mediation allow for a more creative solution than litigation would. They can be a little challenging in the midst of the divorce, but in a number of divorces settled through collaborative law or mediation, those couples look back and are glad they’ve invested in that process.

If you’re interested in an alternative dispute resolution method to preserve your closely-held business, or for any other reason, consider the Law Office of Lisa A. Vance. We offer expertise and experience in those alternatives to litigation, and we’ve worked with financial neutrals that we know and trust to help with preserving and protecting your business interests and your other assets.