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My business partner is getting divorced. What happens to our company?

When a business partner divorces, their share of the company is usually part of the case. Depending on your agreement, their spouse could receive part of its value, or in a worst case part of the ownership itself. The time to settle that is before the papers are filed.

By Greg Garone, CEPA® · Published by Morrowgate Private Wealth · Last reviewed October 2026

Does your agreement protect you?

Four questions. Nothing is saved or sent.
Does your agreement require shares awarded to a spouse in a divorce to be sold back to the company or the other owners?
Does your agreement set the price for that buyback?
Did your partner’s spouse sign a consent agreeing to those terms?
Could you or the company afford to buy those shares within a year?
Your answers

Answer the questions to see what to raise with your attorney.

Go over our agreement with Greg
A hypothetical example

A divorce you weren’t part of

Steve and Paul own a commercial roofing company 50/50. Their operating agreement covers death and retirement. It says nothing about divorce.

Paul’s divorce turns bitter. His wife’s attorney requests five years of the company’s financial records and hires an appraiser. Steve spends months answering questions about a company that isn’t his divorce.

The settlement gives Paul’s ex-wife part of his membership interest. Steve now has a co-owner who has never worked a day in the business and wants to be bought out at the appraiser’s number.

Three ways a partner’s divorce reaches you

No divorce clause

The agreement covers death and retirement but not divorce, so nothing forces shares awarded to a spouse back to the company.

No price

Even with a buyback right, an unset price turns your company’s value into the most contested number in someone else’s case.

No cash

The company has the right to buy the shares back but no way to pay for them on short notice.

What usually fixes it

  • A buyback clause triggered by any transfer to a spouse or ex-spouse
  • A price formula and payment terms set in advance
  • Signed spousal consents from every owner’s spouse
  • A funding plan for a buyback: company cash, a note, or a line of credit

Questions for your attorney

  1. If my partner’s ex were awarded part of his interest, what does our agreement let us do?
  2. Have all owners’ spouses signed consents to our agreement?
  3. How would we pay for a buyback, and over how long?

Partner divorce questions

Can my business partner’s spouse get part of our company in a divorce?

Possibly. In New York and many other states, a business interest acquired during the marriage is generally marital property, and a court may award the spouse part of its value. Whether the spouse could end up holding actual shares depends largely on your agreement.

Will our company’s finances be part of the divorce?

Often, yes. To value your partner’s interest, the company’s records may be requested and an appraiser may value the business. Plan for the time and cost even if no shares change hands.

Can we add divorce protections to our agreement now?

Usually, if the owners agree. Adding a buyback on divorce, a price formula and spousal consents is far easier before anyone’s marriage is in trouble.

Related situations

If my partner died tomorrow, could I afford to buy out the family? Run your buyout gap in 60 seconds. Our buy-sell was signed years ago. Is it still funded? Insurance, stale prices and the 2024 Connelly ruling.

Settle it before anyone’s marriage is in trouble

A 30-minute video call with Morrowgate Private Wealth’s Greg Garone, CEPA®, wherever you are in the U.S. We’ll look at what your agreement covers and how a buyback would be funded, then work with your attorney on the gaps.