“50% of all marriages end in divorce.” We have all heard about the divorce rate in America. But, did you realize that many business relationships end in divorce as well? Business partners often have ties to each other that are as significant (or more significant) than those of married couples. Thought and planning as you structure your business relationship can save you from significant stress and expense in the event of a business divorce. Moreover, thoughtful planning on these issues will help flush out potential problems in advance and allow you to resolve them before they lead to a business divorce.
Here are a few items to think about so that your business can avoid a business divorce:
- Have you worked with an attorney to formalize the relationship with your business partners?
- Do you have a Shareholder Agreement or Member Control Agreement? Is is current and up to date?
- Do you have a buy-sell arrangement? Is is current and up to date?
- Have you agreed upon transfers of equity and succession plans?
- Do you have a current valuation for the business?
- Have you been keeping accurate corporate records?
- Have you considered life insurance for the business owners?
- Do you have a dispute resolution process in place?
If you are thinking about a business venture with another person, or currently have one or more business partners, you really need to address these items as well as others so that you are prepared for your business partnership and mitigate the possibility of a business divorce.
For more information, please contact attorney David Baer at email@example.com or 612.767.3311.