Divorce does not happen in a vacuum, affecting only the couple’s relationship. It has a ripple effect on every other area of their lives, including their children, finances, career stability, and living situation. For couples who own and operate a business together, the consequences of a divorce can be significant. Splits involving corporate executives often hit the headlines and impact the business in a variety of ways.
If you own a business, it is crucial to protect it throughout and after your divorce. You need to work with a Homewood, AL attorney with experience in high-net-worth divorces. Call Kirk Drennan Law at 205-953-1424 to set up a time to talk.
Stock Price Volatility
High-profile divorces can cause a once-stable or steadily increasing stock to become extremely volatile. Investors like to see stability and clarity when pouring money into a company, and the divorce of high-powered executives or founders is the exact opposite. You may see a lot of media playing both sides, stirring up controversy and worry for the sake of gaining readership. Consider the divorce of Jeff and MacKenzie Bezos, which caused a flurry of news articles throughout the entire divorce process. While many anticipated that the day-to-day operations of the company would remain the same, some jumped ship and sold their entire portfolio of Amazon shares.
This is often because the founders or owners of a company own a significant percentage of its total shares. Until it’s clear what will happen with those shares and who will retain an active presence in the company, investors are left hoping that their portfolios don’t tank overnight.
It’s common for high-profile divorces involving business owners to stir up shareholder concerns and worries, contributing to an overall air of instability and anxiety. A leadership transition may take place during a divorce, as it’s very rare for divorced spouses to both maintain their roles in a business—even if they grew it together. In the event that the spouses have very different ideas about the future of the company, investors may be concerned about the less successful spouse taking the reins and running the company into the ground.
Unfortunately, divorce can also tarnish a successful couple’s reputation and image. Marital issues should be private, but those in positions of power don’t always have that luxury. If their divorce brings issues to light—infidelity, financial problems, and petty fights, to name a few—the subsequent damage to their personal reputations could trickle down to the company.
How Divorcing Couples and Companies Can Navigate High-Profile Divorces in Birmingham
Navigating this process with tact and caution can lead to a positive outcome for everyone involved. Prenuptial and postnuptial agreements can set limits and expectations ahead of time, ensuring a relatively smooth divorce process. Divorcing couples can also work together to create leadership transition plans. While working with your ex may not exactly be fun right now, you both have a vested interest in the future of the company.
Even if one of you is completely stepping away from the company, ensuring the business’s future is good for your shared children and for the financial stability you both stand to gain. A solid transition plan may allow you both time to step away to handle your personal matters while putting the business in the hands of executives with a bit more distance from the situation.
You may also want to work with a PR specialist to help you communicate effectively with the press and with shareholders. You want to give out enough information to keep shareholders informed, but not so much that you’re airing your dirty laundry unnecessarily. A PR professional can help you walk that line.
Long-Term Effects of Divorce
No matter where you are in the process, please don’t let anxiety over the future of your company keep you up at night. Many successful companies bounce back successfully after divorce, with the split becoming just a bullet point in the business’s long history. Much depends on the company’s resilience prior to the divorce, the liquidity of the company and its ability to go through stock fluctuations, and how well the divorcing couple works together to promote a strong transition.
Prepare for the Challenges of Your Divorce with Kirk Drennan Law
Business owners face unique challenges during a high-asset divorce in Birmingham. It’s essential to work with an attorney with extensive experience in this area. Get started with Kirk Drennan Law now by calling us at 205-953-1424 or filling out our online contact form.