It can happen to any of us. Forty to fifty percent of all first marriages in the United States end in a divorce. There is a lot at stake in any divorce settlement. For entrepreneurs who have established a successful business, additional risks are involved. When a marriage begins to head for a breakup, it is important to protect and maintain your business as part of the divorce settlement. Here are 5 divorce tips you should consider to ensure the best outcome for you and your business.
Maintain good records. Often times an entrepreneur’s personal account and business account are one and the same. An attorney may argue that your ex is entitled to more of the company’s assets if purchases are made with family finances. It is vital to separate your family’s account from your business finances.
- Pay yourself a good salary. Entrepreneurs tend to pay themselves less than they should in an effort to maximize their company’s growth potential. Your ex’s attorney could then make the case that the family’s income was far lower than it should have been and your ex is entitled to more of the company’s assets.
- Remove your spouse from your business. If your spouse is involved in your business in any way at all, begin to ease them out as soon as possible. The larger the role your ex plays in the company the stronger the case your ex has in proving he or she helped build it.
- Sacrifice assets. In the divorce settlement, sacrifices will have to be made in order to retain 100% ownership of your business. In order to keep your business in your hands, give up on the assets that can be replaced such as the family house or the family car. You can find a new house to live in and a new car to drive, but you may never be able to replace your business.
- Get a fair valuation. Use a neutral, valuations specialist to value your business. Once that happens, go out and arrange an outside party to review the valuation before agreeing on it.
Divorces are never easy, especially for an entrepreneur who faces the risk of losing the business they have invested so much in. Do note that it is rare for an entrepreneur to lose their business as the result of a divorce settlement. Following these 5 divorce tips will ensure the best outcome is achieved for both you and your business.
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