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Splitting up - and staying together

My wife and I have been running a successful recruitment business for the past eight years. We are now separating and had thought initially we would sell the business. We now think it might be a good idea to continue running the business together. Is this sensible and how best should we approach this to avoid arguments?

If you and your wife can still work together, then why not? But you and your wife might want to agree the basis upon which you will run the business in future. It might be helpful to draw up a shareholders' agreement if you operate through a company, or a partnership agreement if you operate as a partnership.

Your agreement can set a structure and process which can work for you both. For example, your agreement can set out (i) how often you meet as directors to discuss the business and the challenges it faces; (ii) how the business should be financed, (iii) how responsibilities are divided and (iv) the decisions that need the agreement of both of you, for example, selling the business, or key hiring decisions.

Going forward, you really need to think about how you will resolve disagreements over key business decisions. If you think that emotion might cloud judgement, then you could think about appointing a non-executive chairman to help mediate. If you can identify an experienced business person whom you both trust, then why not approach them?

You should also be realistic and map out how the business should be broken up if things don't go according to plan. Make sure your agreement outlines a plan to wind up the business in an orderly fashion. For example, you can agree how assets should be divided and who gets to keep which clients.

This article, written by Richard Beavan, first appeared in the Financial Times in July 2014. Richard is a Partner in the Corporate team at Boodle Hatfield.

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