When business owners in Texas get divorced, they may be putting the future of their companies at risk. This is because a spouse may obtain a portion of the company or its assets as part of a final divorce settlement. If a company has multiple owners, everyone’s future could be influenced by the outcome of a divorce even if they aren’t directly involved in it. One way to avoid a potential disaster is to have a buy-sell agreement.
A buy-sell agreement allows an owner to be bought out for a specified price in the event of a divorce. The agreement may also dictate whether a former spouse is allowed to own a share of the company or have other rights. Having a plan in place ahead of time may allow business owners to concentrate on running their companies during the divorce process.
Knowing that a plan is in place may also help to calm investors and employees, which can provide stability to the brand. Finally, it may prevent a business owner from having to go into debt to pay off a spouse when the divorce is finalized. In addition to keeping the company on strong financial footing, it can help a debtor avoid the anxiety and stress that may come with owing a lender money.
It may be possible to come to a divorce settlement through mediation or litigation. How a divorce is resolved may depend on the relationship between the individuals ending their marriage and types of assets that need to be divided. An attorney may be able to help a business owner craft a divorce settlement that allows the individual to retain control of his or her company. A prenuptial agreement may also help entrepreneurs protect their organizations in a divorce.