Breakups are never fun, even if both sides are accepting of the situation. The separation can become even more tumultuous if there is a shared business—and kids!—involved. If you and your significant other are breaking up but share and run a business together, here are some legal pointers and practical tips to help make this life change more manageable.
Even if the breakup is amicable and you and your ex-partner are on good terms and clear about what each of you will get after the breakup, it can’t help to consult with a lawyer to ask if you are getting a fair share of the deal.
If there are kids involved, going to a child support lawyer might be necessary. It’s not about going behind your ex-partner’s back after you’ve already agreed on a deal; it’s about ensuring that you are getting the best possible deal for you, your child, and everything that you have invested into the business together.
Attorneys and financial representatives exist to provide expert advice on how to navigate and approach this business split, what terms are the fairest for their clients, and how and when to finalize the negotiations and decisions. They can help protect your interests and that of your kids before you finalize and act on an exit strategy.
Avoid communicating and negotiating when tensions are high
It’s one thing to run a company with a mere business partner. It’s another to run it with someone you were involved with romantically, especially if you built a life together and had kids together. Marriage makes the situation more complex. When tensions are running high, and you feel frustrated, betrayed, and hurt, you are most vulnerable to making long-term decisions you might regret later.
During these moments, make sure to communicate only with your lawyers and other parties whom you know have your best interests at heart. Avoid communicating with anyone from the other side of the fence during these moments when it’s hard to separate emotion from practical and operational business decisions.
Prepare for the worst-case scenario
If you and your ex started the business when you were already involved romantically, there is a chance you might have overlooked or neglected the founding documents. Think of those documents as like a prenuptial agreement, but for the business: They’re like a shareholder or partnership agreement.
If you were unable to draft this document during the early stages of the business, it might mean a messy civil dispute instead of the amicable and clean split that everyone hopes for. This is especially true if the company is lucrative and doing well. These documents should include the following stipulations:
- Who owns which part of the business and how much of it;
- How to divide the losses and profits in the event of a business breakup;
- The time limit on the business partnership and what will happen if a partner withdraws or dies; and
- Rules for how business and financial decisions will be made and how these disputes will be resolved.
If these stipulations were never clear from the beginning of the business, you need to plan for the worst—which is that the split ends up in litigation, especially if both sides are not willing to walk away. And since litigation always depends on the availability of evidence, you want to ensure that you have your hands on every documentation you are legally entitled to having in your possession.
Determine if it’s best for the company if one of you steps away for good
There’s a reason it is common advice to never let business and personal life intertwine. Still, it’s something that many people can’t avoid altogether, with family businesses being a smart long-term source of employment up to the third generation. However, running a business with someone you know intimately can make the company more vulnerable to conflicts because there is emotion and attachment.
If you and your partner are breaking up but still have the company to think of, identify if it’s in the business’s best interest if one of you steps away for good. One high-profile example of this is Brad Pitt and Jennifer Aniston’s production company Plan B. After their divorce, Jennifer decided to let go of her ownership position in the company, and the business ended up producing award-winning films in the years that followed.
Breaking up is always difficult, but even more so if you have a business together. Take these considerations into account before making big decisions—for the good of everyone involved.