In business, change is par for the course. But unlike changes in market forces or consumer behaviours, separation and divorce can pose unique challenges for private business owners on both a personal and professional level. To increase the likelihood of a smooth business transition, it’s important to ensure both parties are fairly represented—both today and into the future.
To help achieve the goal of a smooth business transition, a growing number of couples are opting to undergo collaborative divorce proceedings. Unlike traditional divorce, collaborative divorce takes place outside of the courtroom and employs the services of various professionals—including lawyers, chartered business valuators, counsellors and accountants—to ensure the best arrangement for all parties, including the business.
For private business owners, this can be an invaluable tool. Aside from helping two parties communicate amicably and work through a difficult time, having access to a variety of professionals can help prevent further complications down the road in a number of ways. Working together, these professionals can help:
- Prepare valuation reports. Often the true extent of a business’s value isn’t always clear. Issues like earnings fluctuations, industry and economic risks, shareholder remuneration, redundant assets and debt complicate determining the fair market value of a business. An independent business valuation can determine a fair market value of the business—and give both parties an accurate place to help reach a settlement.
- Identify tax issues. All too often divorced couples wait too long to recruit the services of a tax professional—and end up paying the price. In a collaborative divorce, the short and long term tax implications are considered as a part of the settlement and the team works to ensure everything is structured properly so as to minimize taxes.
- Educate to level the playing field. Educate the partner who perhaps has less financial knowledge, so they feel more confident and comfortable with financial decisions that are being made.
While separation and divorce is never easy, it can be more complicated when a business is involved. Having a team of trusted and trained professionals on hand is one way to make the process more collaborative—allowing both parties to continue to reap the well-deserved fruits of their labours.