What Happens When Business & Divorce Need Separating?

“After a long period of loving exploration and trial separation, we have decided to divorce and continue our shared lives as friends”

Amazon CEO Jeff Bezos and his wife, MacKenzie.

As a stakeholder in a business, a change in your personal life could have an enormous impact on your professional life. The news that Amazon’s CEO Bezos and his wife have decided to amicably part ways demonstrates this point clearly.

Bezos v Mackenzie Bezos
Amazon founder, Jeff Bezos (reportedly the world’s richest man) and his wife, MacKenzie Bezos, have agreed a record-breaking divorce settlement of at least $35bn (£27bn).

  • Mr Bezos held a 16.3% stake in Amazon.
  • Through divorce proceedings, Ms Bezos will keep 4% stake in the online retail giant, worth $35.6bn on its own.
  • Mr Bezos will retain the remaining 75% of that holding BUT Ms Mackenzie Bezos has transferred all of her voting rights to her former husband.

Your business – A marital asset?

Whether a spouse is or isn’t actively involved with the business, it can and will be seen as a marital asset. Whilst involving your spouse in your business may seem like a great and efficient idea at the time, it may involve a significant level of heightened uncertainty if the relationship breaks down;

  • How will the business be taken into account on separation/divorce?
  • How should the business be valued?
  • Will there be a forced sale?
  • What will the spouse be entitled to?
  • Will you be forced to give your spouse half your shareholdings?

Planning ahead means that you can set out (whilst you are amicable) what would happen on separation, therefore protecting your stake and other shareholders within your business. After all, expediting an ex from your business is a complication that means loss of time and money. There are ways in which you can limit the uncertainties identified;

  • Pre/post-nuptial agreement
  • Shareholder Agreement

At Else, our experts can ensure your business is suitably protected by working with matrimonial experts to future proof your personal and professional situation. If you would like any additional information relating to Business Protection please email Adam.Gilbert@elselaw.co.uk or call him on 01283 526 200. You can also contact Claire Clark at Vines Legal on Claire.Clark@vineslegal.co.uk or call her directly on 01246 555 610 for technical matrimonial advice.

On a similar note… The death of a shareholder has significant impact not only because the business loses one of its key stakeholders but also because of what happens to that persons share in the business? Who inherits the share of the business? Business Wills can be set up to pre-empt these questions and protect your business should an event like this arise. Click the link for more information.

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