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Business Divorce or Corporate Divorce

Sometimes co-owners disagree on management, goals or exit strategies. Sometimes one co-owner abuses control, authority or trust and thereby breaches his or her fiduciary duty. Such situations lead to “business divorce” (called “corporate divorce” for corporations).

 

The economics of a business divorce can hurt both parties. Like the uncoupling of interdependent partners in marital divorce, business divorce can generate emotional distress and legal conflicts that destroy value. Or, by choice, a business divorce can be collaborative and productive, without unnecessary destruction.

We offer Business Divorce Intelligence.™ We pursue win-win solutions, whether through negotiations or alternative dispute resolution. In this context, there are always ways to enable exits that avoid delays, protect corporate opportunities and preserve the dignity, self-esteem and future opportunities for all concerned. Valuations are a matter of professional judgment. In a dispute among owners, you need to choose how to resolve the dispute, or you could remain quagmired by the distractions and downsides of litigation.

 

Negotiated Resolution. We have successfully negotiated many transactions that result in business divorce. The legal formats depend on the circumstances. For example:

  • One owner buys out another owner.
  • The company buys out one owner (or more) in a redemption.
  • All owners sell the company.
  • The company splits off a subsidiary and transfers it to one owner.
Each situation is different, but generally, each owner walks away with cash or an asset that he or she (or it) wants. The business divorce may include some form of incentive compensation such as a residual ownership of equity, quasi-equity or some contingent “earn-out” compensation.

 

Mediation or Arbitration. Mr. Bierce also offers his services as a knowledgeable “neutral” (mediator or arbitrator) to resolve a disputed hostile business divorce by alternative dispute resolution, without going to court.

We offer a two free E-books, one on “RESTRUCTURING” STRATEGIES FOR YOUR SMARTER BUSINESS EXITS and one on “INTERNATIONAL” STRATEGIES FOR YOUR SMARTER BUSINESS EXITS. For a copy, please click here.