Business Divorce

When you need a business divorce, three major issues may arise if your partners are family members. Many small businesses begin as family affairs. Having family involved in the business can benefit everyone. But when things go south with the company, family ties might pose an obstacle to wrapping up your business affairs. You should be aware of the reasons that family businesses break up, how to handle this difficult and emotional situation, and the fiduciary duties you may owe during the business divorce.

Why Are You Getting a Business Divorce?

In a family business, personal and professional matters get intertwined quickly. As a result, the reasons for your business divorce may be complex. Before you start the business divorce process or even decide that you must get a business divorce, consider the reasons for breaking up the business. For you, reasons could include:

  • Interpersonal conflicts about business decisions
  • Different business strategies
  • A marital divorce in the family
  • Poor sales or no clients
  • Downturn in the market
  • Death or disability of a partner

Some business owners might decide that these issues are insurmountable, and a divorce is necessary. Others might agree to disagree with family members to keep the business afloat. No matter your stance on the issues facing your business, you should consider consulting with a business divorce lawyer. Our Houston law firm can advise you on the issues you may face during a divorce or if you decide to stay together. Depending on your situation, we may prepare important documents for you that could protect you should a divorce happen in the future.

When Emotions and Principles Get Involved

A family business can invoke high emotions and matters of principle for partners in the business. People may let their feelings get in the way of purely business decisions. Your partners might be personally offended by something you do for the business, based on their family relationship with you. Family history and beliefs could get tangled up in business reality.

If your business is on the brink of divorce, you need a non-family advisor to take a broad view of your situation. A business divorce lawyer can review your entire business without the lens of family relationships. You need this legal advice to give you the best perspective on how to move forward. With a lawyer’s help, you may have the chance to negotiate an amicable business divorce, preserving family ties in the process.

Fiduciary Duties Owed in a Family Business

Finally, business partners who are family should know that they may owe fiduciary duties to one another. Fiduciary duties include, among others, the duty of loyalty and duty of care. As partners in a business, you owe fiduciary duties to the business. If you are married, you may have fiduciary duties to your spouse even if the spouse is not a business partner. The law requires that business owners uphold their fiduciary duties.

Even if your business is breaking up, you and your family members must observe these fiduciary duties. For example, selling off business assets in a transaction that benefits both the business and yourself personally may be a conflict of interest. If you do not uphold your duties, you could be at risk for legal action. Because business divorces sometimes involve legal claims, take care to understand fiduciary duties before you start a divorce.

On a final note, your fiduciary duties to your spouse likely cease when you get a marital divorce. However, be aware that marital divorce can affect business divorce. In a marital divorce, your property – including ownership interests in businesses – will get divided between you and your spouse. This could result in your spouse becoming a part owner of your business. If your spouse is an owner already, you could be forced to operate a business with your ex. Talk to our business divorce lawyers about the legal guidance you need to protect yourself from this situation.

Family Business Divorce? We’re Here to Help

As experienced business divorce lawyers, we help our clients find the best solutions possible. Our Houston law firm reviews your entire situation and customizes our advice to your family business. Call Henke & Williams, LLP, when you need business divorce assistance. For a consultation, call 713-940-4500 or use our convenient Contact Form.

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