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Negotiations for a Family Business
Here are some tips to keep in mind if you are negotiating about a family business.
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Try to keep the business. If you are the main manager of a family-owned
business, you generally want to emerge owning 100% of the business. This
means you must trade away other assets, a note, or a cash payment. But
then you will be able to focus on running the business without interference
from your spouse after the divorce.
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Keep a majority stake. In small privately-held businesses, a 40%
stake is worth less than 40% of the value of the business. That's because people will
pay less for a minority stake (less than 50% ownership), where the majority owner
controls the company and the payment of dividends. Some
strategists recommend that men try to convince their wives to take a minority
stake in the negotiations. Smart women regard this suggestion very carefully.
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Pressure the partners. If the business is a partnership, the non-partner
spouse can ask for all sorts of financial data on the partnership in the
course of the negotiations. The other partners may not be happy about this. As
a result, the other partners may put pressure on the divorcing partner to
settle. The divorcing partner, for his part, may want to prepare his partners
for what's coming. The non-partner spouse should be aware of this potential
opportunity for leverage. Both spouses should try to be reasonable in this matter, as in all others.
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Watch the books. If you are the non-operating spouse, try to get the
spouse who runs the business to be responsible to make up for any decreases in business
income or value during the negotiations.
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Disclaimer: We are not giving legal advice. No warranties. We disclaim all legal liability. More...
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