Published On: Tue, Nov 3rd, 2015

A ten-step guide to staying in business with your ex

Divorce can be a messy matter at the best of times, but when the couple own their own business together it’s even more complicated.  Paul Hunt, Senior Associate at Southport-based firm of solicitors Kirwans, offers his advice to divorcing couples who run a hospitality business together.

Hospitality - warring chefsAccording to the Office for National Statistics the divorce rate in England and Wales is almost 20% lower than it was a decade ago, but it’s still one of the most common reasons that clients come to us in need of counsel. 

Divorces can range from the truly amicable to the bitterest of tussles, but either way, if the divorcing couple own a business together – as is often the case in the hospitality industry – the complications are magnified tenfold.

With high-stress hospitality businesses often owned by dynamic entrepreneurial partners, relationship breakdowns can deal a devastating blow to the couple on a personal level, and wreak havoc on the business and the family livelihood.

However, when couples have poured years of hard work and energy into building up a business and turning it into a success, their shared passion for the company can mean that they decide to keep it going.

If a couple decides to divorce, but remain partners in business – here’s our ten-step guide to keeping calm and carrying on:

  1. Do Not Press The Self Destruct Button! Remember this business is your livelihood and even if one party ends up pulling out as part of a later settlement, may be a source from which spousal maintenance or child maintenance is paid.
  2. Speak to the professionals – it is important to instruct a solicitor who can provide you with appropriate commercial guidance. A solicitor can draft a shareholder’s agreement which accurately divides the ownership of the business between you and your spouse – according to factors such as historic levels of investment, contribution to the business. This will need to be carefully threshed out by your legal team and can be a very contentious and inflammatory issue. This should also include a buyout provision in the event that the business relationship fails and the business ultimately must be divided. 
  3. Draw up new partnership agreements and redefine company ownership. This is a practical and sensible step to take and should give each party the option to leave the business in the future as it grows and changes. It should also accurately reflect the level of responsibility and input that each party has in the business. This is a complicated area of the law and sound legal advice at an early stage will help both parties to achieve the most equitable outcome.
  4. Remember to try and keep things as civil as possible in the workplace and avoid getting into arguments and saying things in the heat of the moment which could have long-standing, harmful repercussions for the future of your business and family life.
  5. Try and ensure that the business carries on running efficiently and as profitably as possible in the interim period. During this difficult time, do not draw battle lines through the business – cooperation is key – you need to be committed enough to your business to put its needs above any emotional pain you may be suffering. 
  6. Present a united front to customers – they will back off if the atmosphere is too toxic, or if they think you’re a sinking ship. Never take out your feelings on the staff, or try to rally support and get them to take sides.  Obviously they will find this extremely uncomfortable and this could result in a loss of key personnel.
  7. Compartmentalise your lives. Divorce is one of the most stressful experiences life can throw at you.  In order to try and combat this somewhat, create divisions between legal, financial and emotional issues. This will help you not to blur the lines between familial issues and workplace problems. In order to stay at the top of your game and keep your business running as successfully as possible, you need to stay focused and deal as rationally and dispassionately with the day to day running of your business. 
  8. Hire a mediator with a financial background – this can be very helpful, particularly in the early stages of a divorce. They will provide an unbiased, professional sounding board for issues which you and your ex-partner are going through and will be able to provide a helpful perspective into any issues you might be experiencing and help you set the course for a positive working relationship together. 
  9. Take a break – If you can take a short holiday and get away, it’s a good idea to do so after the divorce initially goes through to allow emotions to die down and give both parties a chance to recover from what is a traumatic process, no matter how amenable the split has been. 
  10. Redefine your relationship and create barriers between your work and personal lives. It’s wise to clearly outline your roles and responsibilities at work and ensure you don’t end up micromanaging each other, which can be draining and lead to negative, emotional interactions which can be damaging for the business.
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