When the Family Gets Smaller…


Divorce within a business family can be complicated. There are, however, a few best practices to make the transition easier.

When the Family Gets Smaller (22:46)

by Marion McCollom Hampton

There’s no such thing as a “good” divorce, but it’s possible to make a tough situation better. It depends on how both sides – and family members – choose to work through the aftermath, especially if a divorcing spouse worked in the family business. In this installment of the View From the Owner Room series, BanyanGlobal partner Marion McCollom Hampton shares her advice to families who have to “exit” a family member from the family business. This is a challenging topic because emotions are always heightened, but there are best practices that can make the transition smooth and even positive for the family and the business.

Key Takeaways:

  • First things first. In the midst of a messy divorce, it can be easy to lose focus on what matters most. But you can keep things steady if you put the children first (if there are children involved) and to work together to transition to the next stage.
  • It’s not just a family affair. A divorce in a business-owning family can affect employees and others in the business, too. It’s important to have clear communication and good faith on both sides.
  • The communication to the firm should be a constructive and positive message that highlights the contributions the exiting spouse has made to the business and puts any fears or concerns that employees, owners, or family members may have, to rest. At the very least, neither party should be talking bad about the other and neither side should participate in feeding the gossip mill.
  • Spouses who are exiting the business should still get support from the business as they transition out. If kids are involved, a divorcing spouse is not completely exiting the family. Continue to communicate well with that spouse and provide support to try to maintain constructive relationships not just between the spouses, but between the children, their parents, and the business.
  • Get ahead of the situation with a policy. Be prepared for family members exiting the business long before you have a real situation by having an established family employment policy.
  • Plan ahead, provide support, and be disciplined in how you talk about the divorce and exit situation.

Time Stamps:

[0:35] What is important to understand when “exiting” a family member from the business family– presumably from a divorce?

[2:05] In any divorce where there are children involved, you must put them first and keep it cordial. Do not force anyone in the family or friends to choose sides.

[3:40] Is it more difficult to go through a divorce with a business-owning family?

[5:42] Who should be handling the communication to the family business and all involved parties?

[7:38] What should you do if the divorce is contentious and could affect the family and the business in a negative way?

[9:01] A prenup should allow for clarity in certain aspects of the divorce, such as who gets or keeps what assets, especially in relation to the business, but it doesn’t dictate the way people act when they are hurt or upset.

[10:20] What role, if any, does the patriarch or matriarch play in a divorce in the business family?

[11:40] What is the experience like for spouses who are the ones exiting the family and the business that has played a large part in their life?

[13:03] Why is it important for the business family to handle the divorce in a way that is neutral and in good faith?

[15:15] How can the exit of a family member (not a spouse exiting because of a divorce) for any reason, whether their choice or not, be done well?

[19:09] It takes time for the emotions to cool down after an exit from the business, and that time should be respected.

[20:57] Marion’s top 3 tips for a family and business going through an exit process.


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