Media mogul and business tycoon Rupert Murdock is back in the news—this time for his divorce from his third wife, Wendi Deng. With speculations running rampant over prenuptial agreements and divorce settlements, Murdock’s divorce serves as a reminder to all entrepreneurs that a deteriorating relationship can impact your business.
After Murdock’s last divorce and a settlement that is reported to have exceeded 1 billion dollars, it is likely that a prenup was signed prior his most recent nuptials. So what can business owners and entrepreneurs learn from Murdock’s divorce? Our managing attorney, Colin Amos, stopped by 750 The Game to provide some divorce advice for business owners.
Colin tackled 3 main points that entrepreneurs facing divorce should consider
· How to protect your business before tying the knot
· How a divorce might impact other business partners
· How to protect a new venture if you are already married
Protecting your business before you get married
If you are an entrepreneur, a prenuptial agreement is essential for safeguarding your business in the event that the relationship becomes irrevocably damaged. While prenups are drafted with the hopes that they will never be needed, having one can make all the difference if things don’t go according to plan.
In a marriage, just like in business, you set out with the expectation of success. While you assume the best, it is imperative to plan for the worst. Having an exit strategy for your business is prudent, and the same holds true for your marriage. Like the life vest on a plane, you hope you never need it—but if you do, it is going to be a lifesaver.
Divorce and your business partners
Many entrepreneurs have investors and partners that hold a stake in the success of a business. When one of the business owners if facing divorce that can impact all the stakeholders in the company. A divorce has the potential to expose the business to scrutiny by an outside assessor. Furthermore, the divorcing owner/partner may have to liquidate his share of the business to meet financial obligations outlined by the divorce agreement.
If you are business owner facing divorce, it is essential that you speak with an experienced divorce attorney. They will be able to guide you through the divorce process, while minimizing the impact on your business. The sooner you speak to an attorney the more time and options you will have to safeguard your hard work.
What if I started my business after I was married?
If you started your business after getting married it is likely that the business will be considered marital property and therefore more vulnerable division in the divorce. Unfortunately, your options for protecting your business from divorce are limited if the company is formed after the marriage. However, it is possible to create a post-nuptial agreement to foreclose the business from a divorce down the road.
If your new business venture is being funded with capital from outside investors (like family, friends, or angel investors) having a postnuptial agreement can provide your investors peace of mind.
Post-nuptial agreements can be complex. Speak with an attorney to educate yourself on your situation and if a postnuptial agreement is appropriate given your circumstances.
Protecting the hard work you have put into your business is crucial for weathering the storm of divorce. While you might not be a billionaire like Murdock—you have invested time, money, and you have sacrificed to build your business into a valuable asset worth protecting.
You can hear all of Colin’s advice for business owners facing divorce in the clip below. If you have questions about how divorce might impact your business, give Colin a call, (503) 731-8888. He will answer you questions over the phone at no charge and no obligation.