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Businesses at risk when founders divorce

In business and marriage, people in California might focus so much on succeeding that they fail to consider how to take precautions in case of failure. When romantic partners or close friends start a business, the personal relationships could create discomfort around the notion of preparing buyout agreements among company owners.

This type of agreement details how an owner or stakeholder goes about the process of separation from the business. It could outline how to withdraw from management duties and address how to treat a divorce between company founders. Negotiations typically cover the timing and consideration.

Once a buyout agreement is in place, a company might be shielded from the property division that must occur during a divorce. Without a buyout procedure in place, a court might order the sale of a company to split assets. This situation is playing out at a Delaware company, where a parting of ways between the founders could place 3,500 jobs in jeopardy. Another unfortunate example comes from the divorce of a woman who ran an online diaper service. She had to buy her company back after losing it in divorce court.

A person pursuing a divorce from a spouse who was also a business partner might benefit from legal advice. An attorney could examine any existing prenuptial or buyout agreements and use the terms to guide negotiations for a divorce settlement. Because a business owner might be involved in a high-asset divorce, an attorney could connect the client with an accountant or appraiser who could value the business and provide financial information for the divorce. A complex financial portfolio might require careful legal analysis so that the client can become informed before making decisions about property division.

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