Let’s face it. When you’re so consumed by success, you could end up throwing everything you’ve got to succeed — your wife including. And though that may sound funny, it’s true. Divorce rates for people who are in business are higher than most. Some of the most common causes are financial strain, lack of communication, and neglect. It’s quite fundamental. If you put so much attention on one thing, you may fail in another.
And that speaks not only for those who are struggling in business but also for those who succeed. Bill Gates and his recent divorce from Melinda, his wife of 27 years, is one clear example. The news has sent quite a negative view of probably the most celebrated tech billionaire in the world, especially true with the media harping on cases of indiscretions while he was actively leading Microsoft. As different news sites would have it, the squeaky clean image of Mr. Gates is eroded.
While not all of us will become billionaires, we must keep some protection against the negative effects of a divorce, especially true if you’re running a business. Fortunately, it isn’t a lonely path. Expert advice should help clear your business from ruin should a divorce comes knocking at your door.
Consider a Compromise
Let’s face it; companies are a production capacity. To borrow a term from the legendary Stephen Covey (7 Habits), a company lays you golden eggs. It produces profits, assuming it’s healthy, of course. If it’s done away with, it can be detrimental to both parties, not to mention an army of employees.
So right from the get-go, decide to keep the business. You need not end a business just because you and your spouse have ended your relationship with one another. Well, this is easier said than done, especially if your significant other is a co-owner of the business.
But aim to have separate discussions concerning business and private/personal matters. Both of you should agree that keeping the business alive and well works best for both of you. Indeed, this can be a tall order, but things should work out best if each of you considers compromise.
Employ an Independent Appraiser
As per law, the value of your business must be appraised to come up with a justifiable divorce proceeding. If you’re both co-owners, that may not be much of a problem as each of you knows the value of the business. The problem comes if one of you is not a co-owner. The valuation can increasingly become a contentious issue.
That’s because the owning partner will gun for a lowered value while the non-owning partner will want to have a higher valuation of the business. To solve such a divisive point, hiring an independent no-nonsense appraiser should be wise. That way, both your interests are protected.
Be Aware of the Law
There’s a lot to be considered in a divorce proceeding. For one, each state in America has its own version of a divorce proceeding. So what works in one may not work in another. A good example here is the “goodwill” clause. Some jurisdictions will include “enterprise goodwill” in the business appraisal. However, some states exclude “personal goodwill.” Other states do not include both.
As confusing as it may sound, hiring a reliable divorce lawyer can go a long way in resolving up-and-coming court issues. At the same time, you should seek to be in the know. Research the ins and outs of the law governing divorce in your state. In doing so, you can come up with a better valuation strategy that your team can present to the court.
Be Transparent
You’re bound to be as vengeful of the other if your divorce proceeding doesn’t go as plan. In the process, you can commit errors that could bury you in greater trouble even more. For one, you should not make any drastic changes in your company while the divorce proceeding is ongoing.
When you change the business model, for instance, the timing could be suspect. The court could sense that you’re up to something. And that can be not good when they realize you’re trying to make revenues appear less. That can certainly raise some red flags.
Have a Smooth Transition
Another contentious issue happens when each of the spouses works the business. It can certainly be a tug-of-war if there’s bad blood between them during and after the divorce.
If that’s the case for you, a good way to avoid such unnecessary friction is to let one of the spouses play a more limited role. Even better, a total change in roles could be best. Truly, things can depend a lot on the situation and the nature of the divorce. But it can be hard for people who used to be together to work in the same company after the divorce. That can certainly fan emotional flames, which is a recipe for lowered productivity.
In this regard, a smooth transition should be a worthy goal. If the spouse works with you in the company, making the transition as smooth as possible should be part and parcel of the divorce proceedings.
Divorce can indeed be a can of worms. But it need not destroy your business. Given the right methodology, it shouldn’t.