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Dividing A Private Company Vs. A Public Company During Divorce

Couples preparing for divorce in Ohio need to determine a way to divide their shared resources and financial obligations. Both the process of putting a price on large assets and the act of negotiating how to share or divide that value can prompt emotional responses and practical challenges for divorcing couples.

A business owned by either spouse will likely be one of the most valuable joint assets and could prove a major stumbling block during divorce negotiations. Couples often disagree intensely about everything from what a company is worth and who should manage it to how decisions about the business should affect other aspects of the divorce. It is worth noting that the type of organization at stake can have a significant influence on the property division process. The outcome can be significantly different for a privately-held company as opposed to a publicly traded organization.

Publicly-traded businesses may require more steps

Dividing an ownership interest in a publicly-traded company can take more time than dividing the marital interest in a privately held company. Establishing the value of the ownership interest that the spouses hold and how much of that is marital property is one step that can be simpler, as there will be information about what the stock for the company is currently worth and projections about future earnings.

Determining whether the spouses will actually divide that ownership interest between the two of them, liquidate it or grant it to one spouse in consideration of other assets will also have a powerful influence on the outcome of the divorce proceedings. Whether they have a minority or majority interest in the company will influence the process. In some cases, the couple may require the permission of other shareholders to make changes to the ownership arrangements for a publicly-traded company.

Privately-held businesses are at more risk

Sole owners have more control over what happens with privately-held businesses during divorce, but that could potentially also mean that the organization itself is at higher risk of dissolution. After all, the spouses would only likely have a minority interest in a publicly-traded company as opposed to sole ownership rights for a private organization.

In some cases, the spouses might agree to sell the company or dissolve it as part of the divorce proceedings. In both scenarios, spouses might choose to use the value of their interest in the business to offset other financial decisions, like determinations about who keeps the marital home. They may also want to pursue collaborative divorce proceedings or mediation to maintain more control over the outcome of the process.

Taking the right approach to valuing and splitting an ownership interest in a business during an Ohio divorce can be crucial to the fairness of a divorce outcome and the ability of spouses to rebuild financially afterward.


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