Entrepreneurs at Greater Risk of Divorce?

January 03, 2011 | Blog, Business Valuation, Divorce, Family Law News, Marital Property

Icon for author Brian Vertz Brian Vertz

The holidays have given me some time to catch up on my overdue reading list. One article I recently caught was Inc. Magazine’s November 2010 article on entrepreneurs who divorce. Business owners may be at greater risk of divorce, the article suggests, because of the time and emotional investment that a fledgling business requires, the independent attitudes that entrepreneurs may develop, and the financial sacrifices that may be necessary.

Conversely, divorce may adversely affect a business, the article notes:

Just as company building can lead to divorce, divorce can destabilize a company, and even sap brand equity if the company trades on a family image. Chris Blanchard grows 20 acres of vegetables at Rock Spring Farm in Iowa, a stone’s throw from the Minnesota border. In his original marketing materials (which he is slowly replacing), he and his now-ex-wife, Kim, were the literal face of the farm.  …  He hasn’t lied about the end of his marriage, but he hasn’t broadcast it, either. “Look, my customers want a good story with their vegetables,” he said. “They want a narrative. This divorce just doesn’t belong in a Smith & Hawken catalog. And I have a business to run.”

Financially, divorce can affect companies by imposing new financial obligations (child support, alimony, business buyouts) upon owners, divesting collateral for loans, or depriving the owners of an independent source of income to pay personal expenses. Those risks must be considered and thoughtfully resolved in any divorce involving business owners. Like children, businesses can become unwitting victims of divorces that are not properly handled.

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