Your Business After Divorce

Promise to love, honor and cherish your business--even if you share it with your ex-spouse.
Magazine Contributor
6 min read

This story appears in the April 2000 issue of Business Start-Ups magazine. Subscribe »

In "Your Business," you read about married couples running businesses together. Well, things don't always work out. In this column, you'll read about divorced couples operating businesses together. Although most experts agree the chances of a husband-and-wife-owned-and-operated business remaining intact after a divorce are unlikely, the events leading up to each divorce are different. And some couples do make it work.

"[It's] not uncommon," qualifies Ivan Lansberg, a family business consultant in New Haven, Connecticut. This is especially true if motivation and trust are present.

First, you need to have, or think you're going to have, a successful business. It serves as the motivation to hammer out a working relationship. "Nobody wants a successful asset to slip away," says Kay Wakefield, a partner in the Portland, Oregon, law firm Wakefield McCobb P.C.

For Debi Davis, founder of Fit America, an herbal supplement weight-loss company based in Deerfield Beach, Florida, and her former husband, Byron Davis, the company's CEO, it was a question of staying together to build the company. "We were entrepreneurs who just didn't want jobs elsewhere," says Debi.

Second, "both husband and wife have to have a high degree of trust in each other's competence, character and commitment to the business," says Joseph Paul, a family business consultant in Portland, Oregon.

It was that trust that prompted Juanita Ellis to call her former husband, Steffano Korper-despite their divorce-and ask him if he wanted to join her as a developer and co-founder of The E-Commerce Program, a training program for people interested in doing business over the Internet. "We had worked so well on networking technology programs when we were married and teaching at the University of Maryland," Ellis says, "that I thought, 'Why not partner up with someone I trust and who wants what I want?'"

Ties That Bind

Whether a continuing working relationship will be successful-or even possible-depends on how emotional, deep-rooted or dramatic the events leading up to the divorce are. Says Lansberg, "If the people realize their personal relationship wasn't meant to be, that's painful but not necessarily destructive to the business. On the other hand, if the divorce is a result of an infidelity with someone in the company, that adds a complication to the possibility of working together."

Even when people have an "amicable divorce," emotions run high. So both people need to be able to manage their emotions and jointly establish ground rules about what is appropriate post-divorce workplace behavior, says Lansberg. Otherwise, there's a strong possibility the business will implode from sabotaging, second-guessing, bad-mouthing and sagging morale.

It may be that one of the two people will want to leave the business eventually because the stress of working together on a regular basis is too difficult. "If the couple can agree to a slow fade-out solution while they disengage from each other, they'll have a greater chance of keeping the business afloat and the assets intact than if they want to pull apart as business associates right away," says Lansberg.

What helps shore up the business relationship?

Using other people to help resolve conflict, being open enough to work out processes by which to solve disputes, and buying time for emotions to simmer down are all useful strategies for former husbands and wives motivated to stay in business together.

  • Therapy and mediation. The best of all possible scenarios, according to Paul, is if each person worked with a personal therapist to help him or her continue to grow as an individual, and if the couple worked with a specialist in marriage and family therapy to deal with the complexities involved in being in business together while divorced. Mediation, a process that uses a trained and trusted professional to assist with joint and practical problem resolution, can also help the parties come to business solutions, says Lansberg.
  • Role models. You can learn about alternative ways of handling situations from meeting with others who have been there and who have stayed business partners even after divorces. "Mediators can be especially helpful here in making the connection," says Lansberg.
  • Willingness to discuss the process of staying together. "Joseph Paul and I have worked with a divorcing couple who would like to stay in business together because they share a vision and passion for their company," says attorney Wakefield. "So we made their statement of purpose the preamble to their buy-sell agreement. It's meant to serve as a reminder to them when things go sideways of why they're in business together. But we've included in the agreement a process of how they should go about separating themselves from the business, should they want to do that sometime in the future. It includes a time-out period for them to think over the dissolution, followed by a method for independent board members to mediate an arrangement. If that's unsuccessful, it ratchets up the involvement of others by engaging in formal mediation and finally arbitration." To reach this type of agreement, the couple had to be able to sit down and talk things through in a somewhat unemotional way and appreciate how important communication is.
  • Separating private life from business life. It doesn't hurt that Ellis and Korper are able to live in two different cities, she in Los Angeles and he in Dallas, and do much of their communicating by phone, fax and e-mail. They don't run into each other regularly, and "we don't share what we're doing personally-even where we're going on vacation," says Ellis. Couples with children have a more difficult time keeping their personal distance from each other, but it's still possible.
  • Maintaining a cordial and cooperative working relationship. Debi admits that when she and Byron first separated, being cordial was difficult. "I wound up writing letters to him, which allowed me to make my points unemotionally." Now they're able to work together as 50-50 partners; he as the inside person, she as the public relations and point person.

At E-Commerce, Korper and Ellis let everyone know they're divorced ("I speak of Juanita as my lovely ex-wife," Korper says). Since all their clients know they get along very well, however, no one will attempt a divide-and-conquer routine.

"The whole thing has worked out very well," says Debi. "In our business relationship, [Byron and I ] have become best of friends."

Patricia Schiff Estess writes family business histories and is the author of two books: Managing Alternative Work Arrangements (Crisp Publishing) and Money Advice for Your Successful Remarriage (Betterway Press).

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