6 Guidelines for Helping Your Business Survive a Divorce What business owners need to know when they find themselves in divorce proceedings

By Arkady Bukh

Opinions expressed by Entrepreneur contributors are their own.


Marriage always brings with it the hopes of "happily ever after." But once the fairy tale has devolved into the routine of everyday life, the fact remains that 50 percent to 55 percent of all first marriages end in divorce; the percentage is even higher for second marriages. While divorce is difficult for everyone, a fairy tale can become an absolute nightmare if the couple co-own a business.

Related: If You Run a Company Together, What Happens When You Divorce?

Then there are the employees to think about. When the co-owners talk about divorce, employees understandably worry and feel stressed about the future of the business and their jobs.

So, if you're an owner involved in a divorce, think ahead. Laying a legal foundation and staying calm can make a stressful situation, while never pleasant, less traumatic than it would otherwise have been if both parties start shooting from the hip. Here are six guidelines:

1. Handle the emotional fallout before emotions become the focus.

Hopefully, you did some thinking before your marriage. Because, with prenuptial agreements in place, you'll find that emotions can be managed and the focus can be put on logic. Before marrying, you should have "the conversation" with your fiancee about what each of you would like to have happen if the worst occurs.

When constructing the prenup, make sure that both parties have their own legal representation; it's not unusual for a prenup to be tossed out if it turns out later that one of the parties didn't have an attorney when the prenup was developed.

Be honest, clear and transparent when putting together your prenup. If a judge believes you have been less than entirely honest, your agreement will be legally baseless and won't stand up in court.

In addition to a prenup to protect your assets in case of a divorce, establish a buy/sell agreement when you first start the business.

Having a conversation about what you want if things don't work out as planned often helps couples have a more reasonable discussion when divorce hits.

2. Discuss the future -- early.

Once you've made decision to divorce, start a conversation about what should happen with the business. Do this before any attorneys get involved. Once those respective attorneys are in the mix, they'll likely be pacing the arguments to get their client as much from the settlement as possible.

Both parties may have to compromise in other areas to protect the business. So, a list of agreeable options will be handy to have for that first meeting with the lawyer.

Related: 5 Essential Tips for Financial Planning After Divorce

3. Find attorneys who can empathize.

You would be wise to find lawyers who share your business concerns. Couples often share the desire to save the company and protect their employees from unnecessary stress.

Working with an expert who is committed to developing solutions means the business won't have to close.

4. Opt for a 'collaborative' divorce.

Consider finding an attorney who practices collaborative divorce. A form of alternative dispute resolution (ADR), collaborative divorce is a process in which all parties meet in a nonconfrontational manner to develop the options and enter into negotiations.

What makes an ADR unique is that the lawyers and clients sign off on a participation agreement in which the lawyers agree that if a settlement is not reached, they will back out of the process and not push for litigation.

This forces the attorneys to strive to actively manage the emotions, conflict and family issues that arise in a respectful, constructive manner.

5. Use mediation.

Another option to out-and-out divorce is mediation. Mediation specialists practice facilitative mediation, where the mediator focuses on involving both parties in the conversation in order to develop a mutually agreeable resolution.

Feeling that they've been treated respectfully and feeling heard is a powerful experience for the divorcing parties. Often, the mediation experience itself ends up bringing about reconciliation. But even if reconciliation is not the outcome, a mediated resolution increases the chance of a win/win outcome.

6. Employ multiple options.

Too frequently, only one option is explored. Remaining open to alternatives that may at first seem far-fetched can often provide the only door to a satisfactory resolution.

Planning, foresight and the ability to explore options are crucial to helping a family business survive.

Related: How to Protect Your Company From Your Business Partner's Divorce

Arkady Bukh

Veteran New York lawyer, Partner of Bukh Law Firm

Arkady Bukh is a New York federal defense attorney and the founder of Bukh Law Firm.

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