When a California couple chooses to divorce, they may be impacting more than just their lives. This is especially true if they ran a business together while they were married. Therefore, it may be a good idea to have a written agreement that spells out what would happen to the company in the event of a divorce. Doing so may give the estranged owners more say regarding whether the business is sold or who retains control after a divorce.
In some cases, the state may have to step in to determine how a business should be treated in a divorce. TransPerfect, a company based in Delaware, had 3,500 employees when the relationship of the engaged owners went bad. A court ordered the company to be sold since neither side could agree on a way forward. The state legislature had to get involved because of questions regarding the fate of employees if the company were sold to a private equity firm.
There are some steps that married business owners can take to shield the company from divorce proceedings. For instance, it may be possible to have one spouse relinquish his or her management role within the company. It may also be a good idea to keep business and personal funds separate throughout the marriage.
Individuals who have business interests may want to talk to an attorney about protecting them. In some cases, it may be best to come to an agreement prior to getting married that determines how those interests are handled. It may also be possible for one owner of a company to buy the other out. Legal counsel can often prepare agreements that cover these matters.