When a divorce involves a family business, the consequences can go far beyond personal relationships. The way the company runs, its money and its future plans can all change. While many think courtroom battles are inevitable, private mediation offers a great alternative.
It is confidential and collaborative
One major benefit of mediation is that it is confidential. Unlike public court cases, mediation sessions are private, which is valuable for businesses wanting to protect sensitive information. Moreover, New York law forbids using statements from mediation in court. This allows for open discussions without fear of public exposure.
Mediation also provides a space for opposing parties to work together, allowing them to focus on shared interests and long-term success. This can lead to solutions that keep the business running smoothly.
It can offer tailored solutions
Courts have set rules to follow when splitting marital property – such as a family business – but mediation can offer you more control and flexibility over the outcome. Parties can explore solutions such as:
- Changing who owns the business slowly over time: This may be preferable to making a sudden switch. For example, one spouse might buy out the other’s share bit by bit over the years.
- Making succession plans: This means planning who will run the business in the future. It might mean training new leaders or setting up a timeline for when current owners will step down.
- Finding fair ways to determine what the business is worth: This might include examining future earnings or considering factors unique to the business.
- Making flexible plans to share the business profits: These can change based on factors like who is still involved in the business or other future agreements.
It is important to note that the court must still approve any agreement to make it legally binding. Judges generally respect agreements reached through mediation, understanding that the parties often know best how to resolve their business situations themselves.
However, while mediation is helpful in many cases, it may not be right for everyone. Traditional litigation may be necessary in cases of abuse, power imbalance or financial dishonesty. It’s best to talk to a lawyer to figure out what’s right for your situation.
Moving forward does not have to involve conflict
There are ways to protect the business you’ve built without damaging relationships or resorting to costly court battles. Getting early legal advice can make a big difference. An attorney specializing in divorce law can help you decide if this is the right path for you and your business.