Summary:

Divorce in itself is hard. When you’re trying to divide a business as part of the divorce, the possibility for complication and messiness goes way up. Today’s guest is an expert in corporate law and business valuation, and we’re discussing our top “what not to do’s” when it comes to setting up a business, valuing a business, and dividing up a business when you get divorced.

Today we’re talking about getting divorced when you have a business, whether you own or co-own, and what happens with the business. Today’s guest is a personal friend who happens to be an expert on this subject.

Curtis Anderson is a professor at the BYU Law School. He joined the BYU Law faculty in 2015. Prior to that he was an Executive Vice President and General Counsel of Match Group, which owns and operates the world’s largest online dating platforms including match.com, Tinder, meetic, okcupid and over 40 other brands. Match Group’s market capitalization is currently over $45 billion. Prior to joining Match Group, he was a partner in the Dallas office of Baker Botts, an international law firm with 13 offices in seven countries. He earned an undergraduate and law degree from BYU.

Most people don’t pay an attorney to set up their business. It is usually more expensive to clean it up later if you grow. It’s not that hard to do it right the first time, even if you do it yourself. Founders need to consider these 3 things:

Capitalization- someone has to put in the initial capital. Need it documented who owns what and how much

Decision making- how are decisions made? Is it majority or unanimous?

Exit strategies- who and when do people have the right to leave, and what are the terms?

Is your business considered a marital-owned business or not? You need to know your state laws, because the assets of the business may be considered joint, even if your spouse isn’t officially documented as a business owner. 

There is a difference between asset and income stream. These are divided differently. Make sure your attorney understands and has experience in dividing businesses in divorce.

How do you determine value in business? NOT tax returns. Financial statements are a better look.

Biggest mistakes in dividing business in divorce:

• not putting in protections ahead of time when people are less emotional and biased.
  • do a prenup agreement if you have business before marriage
  • do a postnup agreement if you’re building a business during the marriage
  • write up business organization documents and include any spouse of any partners to protect business assets 
• getting too emotional or vindictive about dividing the business and forking over tons of money to attorneys when that money could be for you and your ex and your kids.