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How to Protect Your Company From Your Business Partner's Divorce Make sure problems in one partner's personal life don't wreak professional havoc.

By Steph Wagner

This story appears in the May 2015 issue of Entrepreneur. Subscribe »

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Before you formed your business partnership, did you vet your partners' marriages along with their bank statements? You may not consider it until divorce proceedings are underway, but your partners' spouses likely own a part of your company, whether you want them to or not.

In my day job as a financial strategist specializing in complicated (and often highly contentious) divorces, I rarely see a case where the day-to-day operations, valuation and ownership structure of a business is not affected in some way by a breakup. If your partner's soon-to-be ex receives a part of the business in the divorce settlement, you'll gain a new, unwelcome partner who now has a voice in how your business operates and, by extension, can impact your own net worth.

Michael Lees, a business attorney and partner at Solomon Ward Seidenwurm & Smith in San Diego, recommends including a contingency for divorce in your company's setup. "Start with a well-drafted partnership, ownership or shareholder agreement that requires a partner's spouse to sell his or her awarded interest back to the company (or to its co-owners) in the event of divorce," he says. "This buy-sell provision should contain a comprehensive list of terms and conditions, including the method by which shares will be valued, the transaction timeline and the source of funds to be used for the purchase, such as cash on hand, an existing line of credit and/or a loan."