The world of divorce is a place with an infinite number of stories that play out as a short list of common themes. The biggies: the well being of the children, how to divide assets, who gets the marital home and the complications of a parenting plan. We also know that divorces are rarely the end of the relationship in the sense that once they are final you never have, or need to have, contact with the other party again. The ties aren’t always easy to cut. Most often the residual relationship revolves around kids or mutual friends but there is another equally complex tie that can bind – the family business. When the acrimony is high and the feelings raw it is often impossible to imagine that a working relationship that may be the foundation of future financial stability can be salvaged or at least managed. Mediators often hear the plaintive question, “Could I have divorced proofed my business?”
Traditionally divorce proofing has meant having a pre-nup, or setting up a trust or negotiating a buy-sell agreement that is triggered by divorce in order to give control to one party or the other when the personal relationship dies. These are logical, rational steps. But let’s consider a different definition of “divorce proofing ” your business. For some people working together after divorce just makes sense. They love their jobs, they are good at them and they couldn’t earn anywhere near as much if they started another career. What if both husband and wife are integral to the functioning of the brand? These are typical stories. So a cut and dried classic divorce proofing strategy may not optimize the post divorce world for either party.
As we all know, divorce is a painful and complicated process involving many layers of entwinement. We talk of the “divorce onion” with all the relationship layers that need to be addressed and changed – emotional, sexual, parental and so on. Add striping off the layer of all the elements of a vibrant business life to the mix and the prospect can be daunting.
Even as you consider starting a mediated, cooperative process, there are at least five critical preconditions to successfully making a post divorce joint business agreement that you should consider.
First, you need to have a business that’s worth all the effort. Or is it just a safe refuge? Take a good hard look at your other career options and those of your spouse.
Second, you need to have a fundamental trust in each other’s competence and commitment to the enterprise you share. Trust takes time to develop and if it’s not already there, this is no time to be establishing that kind of a relationship.
Third, what is the basic nature of your work together and how has it changed over the past few years? Do you need to be in daily close physical contact with your ex or can you communicate effectively by phone, text or email most of the time? Depending on how you get along with each other, these may be important elements in deciding whether to consider continuing to work together.
Fourth, recognize if a participating event to the divorce may be too hard to overcome and was business connected. For instance, is the divorce a result of an infidelity with a co-worker in the company? Were there financial losses due to potentially poor judgment calls or missed opportunities? Are there other family members involved in the enterprise that will make continuing to work together difficult or even impossible? These issues could be deal breakers for one of you but not the other.
Fifth, what do you want your relationship to be in the future? If you truly like one another and want to remain “friends” in some form, working together might be a fine idea. If, on the other hand, enmity prevails and you aspire to have little or no contact with your soon-to-be ex spouse, you might want to reconsider the idea of a continued working relationship.
If you get past these filters, here are six rules to consider with your mediator that can support a successful transition.
First, recognize that the negotiation process itself will take time and probably many sessions. One of the benefits of mediation is that it is customizable to fit your unique situation. Let the mediator help you develop the most efficient process for you and your soon-to-be-ex.
Second, try to settle the contentious personal divorce issues before you tackle the business issues like valuation and any new ownership structure you may be considering. How you work through these complicated issues may help you determine the likelihood of your developing a successful working relationship.
Third, identify and acknowledge the relationship hot buttons and restructure your business interactions to avoid them. Set ground rules for communicating and interacting. This may include keeping private life scrupulously separate from business life. Set new relationship and second marriage ground rules about what is appropriate post-divorce workplace behavior. Maybe new significant others just can’t meet you at the office. Maybe step children or members of an ex-spouse’s new family cannot work at the company.
Fourth, set objective performance evaluation criteria. This will keep decisions about bonuses, distributions and/or continued employment within the business realm and free from potential personal vendettas.
Fifth, let humor rule wherever possible. Remember, we are but specks in the universe and our problems are really no different then those of millions who have passed before us. Self-importance has ruined many a delicate relationship.
Sixth, agree to return to mediation if/when the going gets tough.
You are not alone. We have worked with many couples who successfully have developed rules of engagement to guide their post-divorce workplace interactions. With careful consideration and forethought you can identify likely pitfalls and work to avoid them.
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