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How to keep your family business thriving during divorce

On Behalf of | Oct 6, 2023 | Divorce

Divorce can have far-reaching effects on various aspects of life, including family businesses. When you and your spouse are undergoing a divorce, take proactive steps to ensure the continued success of the family business.

Above all, separate personal issues from business matters. Avoid bringing personal conflicts into the workplace and focus on the best interests of the company.

Communicate openly

Keep communication among family members involved in the business open and honest. Ensure that everyone is on the same page regarding the future of the company. Clear and respectful discussions can help identify common goals and facilitate decision-making.

Define roles and responsibilities

Establish well-defined roles and responsibilities for each family member involved with the business. By clearly outlining who does what, you can minimize conflicts and maintain the smooth operation of the company.

Develop a succession plan

About 88% of family business owners want to transfer the business to another family member, but about 30% of family-owned businesses continue into the next generation. Creating a succession plan is important for the long-term sustainability of the business. Determine who will take over leadership roles if necessary, and document and communicate these plans to all involved parties.

Maintain financial transparency

Stay transparent in financial matters by keeping accurate records and sharing financial information with all family members involved in the business. This transparency can prevent disputes and build trust among family members.

Focus on the business

Amid the emotional turmoil of divorce, keep the focus on the business’s success. Avoid getting distracted by personal issues and maintain a commitment to the company’s growth and prosperity.

Consider mediation and conflict resolution

Mediation or alternative dispute resolution methods can resolve conflicts related to the business. These processes can provide a more amicable way to address disagreements and reach mutually beneficial solutions.

Protect the business’s assets

Take steps to safeguard the business’s assets, such as intellectual property, real estate and investments. Clearly define ownership and control of these assets to prevent disputes.

Review any existing legal agreements, such as partnership agreements or operating agreements. Make any necessary updates to reflect the changing dynamics within the family and the business.