Business Divorce

Most businesses start with intentions of being successful and not having strife with their business partners. Similar to the beginning of a romantic relationship, a newly formed business may forge ahead ignoring signs, and possibly even red flags, that the relationship may not last. Not wanting to dampen the energy created by the new venture, they may ignore shareholder agreements and operating agreements and instead just open their doors for business. However, some business ventures fail to live up to their potential. Others experience operational, financial, or philosophical challenges.

Careful planning and documentation can help mitigate or lessen business disputes. At a minimum, the business operating or shareholder agreement should speak to the controlling ownership, capital, distributions, adding additional members and/or shareholders. Equal ownership is problematic as there is no tie-breaking mechanism. Customer relationships and key employees are central to the success of the business and can be addressed in restrictive covenants. And while no one ever wants to contemplate the end at the beginning of a relationship, a buy/sell agreement is always needed.

Business owners may find themselves faced with an increasingly strained business environment if the owners differ on operational, strategic, and financial direction. Carefully crafted agreements can provide guidance and direction for the business owners. In their absence, the company’s operations may be strained enough that the only option left is a “business divorce.” The divorce of business owners may have as much emotion as a matrimonial divorce. Assistance from experienced legal counsel who have guided companies through corporate divorce or business breakups is vital.

Our business divorce attorneys have extensive experience assisting Arizona businesses with their business divorce ranging from structuring buy-sell agreements to removal of a partner; from negotiating a viable settlement to litigating claims. They also understand the emotions, the desire to emerge with a vibrant company, and the need to maintain cohesive relationships with both customers and key employees. Our goal when assisting a company through this type of situation is to allow the owners to focus on their business and its operations while we concentrate on the legal solution.