Divorce law for business owners

This is a question out of the TV show Entourage:

If a guy has a business worth $100 million and gets divorced, and his wife gets half, is he obligated by law to pay cash, in which case he has to sell his business to raise the cash if he doesn’t have $50 million handy, or can he just give half the shares to his ex-wife?

In general if the parties can come up with an agreement the judge is very likely to agree to it. Most divorce laws seem to be based on general principles of equability. So as long as the parties think it is equable, and the judge agrees then that is ok. So mostly it would depend on the parties.

If the parties can’t agree and a judge is forced to make a ruling, it would depend on the individual situation. So it is hard to make a blanket statement. The judge would have to take into account why there is a disagreement on this point and try to make the most equable division. Given that the value of the asset (the company) is largely in the hands of one party and not the other, on the whole I would think that a judge would try to disentangle the parties as much as possible, the wife getting alternative assets worth roughly the same amount. Forcing a sale of the business would probably not be a favored solution. As that would likely reduce the earning potential of the husband. And the business may have to be sold at a fire sale price to find a buyer, reducing its value to both parties.

Half is half. If he can’t buy his wife out, she becomes a partner in the business. She then may or may not have the option to sell her portion to someone else.

It’s not uncommon for a silent partnership (the non-business inclined parter agrees to stay out of the day-to-day operations) and slow buyout to occur. It’s generally the smarter choice as the end result is more money for everyone (ideally)

One option is, the non-owning party can get private stock in the business which the owning party has the option to buy back at a later date.

This is, of course, if one party has no desire to be a partner.