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Small business forum: entering into partnership with divorcee

by: MAP857 May 6, 2012 8:51 AM PDT

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entering into partnership with divorcee

by MAP857 - 5/6/12 8:51 AM

I am contemplating on entering into a business partnership with an individual who in the process of finalizing a divorce with his wife. Since his current business was started before the divorce, we plan on starting our partnership would as a different LLC. The new LLC would purchase the assets of his previous company. We would be expanding on the business model of the previous company.

I am eager to learn from the members of their similar experiences and attempt to understand where to be cautious and what possible problems I (or my business partner) can encounter in regards to his current divorce.

I appreciate the advice.


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Re: divorcee

by Kees_B Moderator - 5/8/12 10:25 AM

In Reply to: entering into partnership with divorcee by MAP857

All I can advice: he should ask the lawyer that handles the divorce for him. Timing might be relevant.

This surely needs juridical expertise.

Kees


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Reply to: entering into partnership with divorcee

by GMFS - 5/20/12 8:26 PM

In Reply to: entering into partnership with divorcee by MAP857

I think if you don't have a lawyer you might need one. Also, perhaps a site such as Legal Zoom can help you find the legal papers you need to sign to make everything official. Make sure you understand all the facets of forming an LLC.


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Lawyers and Contracts!

by smdipietro - 6/7/12 1:38 PM

In Reply to: entering into partnership with divorcee by MAP857

Your partner's estranged wife very likely is entitled to a 50% interest in his current business. In order to start a new LLC and fold in the existing business, it will be necessary to settle with her first. It is a common misconception that your prospective partner can just go out of business, stiff the wife, and start fresh with you. If you try this, she will sue him, you, and the new business and it will get ugly. Your assets can be tied up until the suit is settled (possibly years from now).

Evaluating the existing business will be an interesting exercise and possibly contentious. This must be done before the estranged wife can be bought out. You also have an interest in finding the correct value for the existing business, so you will also need an independent evaluation. She will want the value higher and you will want the value lower, so there is an inherent conflict.

You are wise to proceed with caution. Get everything in writing and engage your own lawyer. This is vital, since only your lawyer will have a fiduciary responsibility to you (the person paying their bill).

Good luck.


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