You Need a Prenuptial Agreement
The Gen Z guide to startups, marriage, and divorce.
Members of Generation Z are far more likely to marry than Millenials which is a good thing, but many of their unions will take place after they’ve already started their businesses. In my experience most startup founders considering nuptials dread discussing financial matters, much less the prospect of a potential divorce. When your company is worth less than zero a prenuptial agreement may seem silly, especially given how uncomfortable and risky the resulting conversation could become. The truth is that you will need one and the sooner you handle it the better.
Startup founders with prenuptial agreements are the rule and not the exception. For example, Google co-founder Sergey Brin and his partner signed a prenup in 2007 and when they divorced in 2015 his ownership of Google remained the same. Similarly, Oracle’s Larry Ellison, has been married and divorced repeatedly without any impact to his wealth or ownership in his company.
Even if you don’t think a prenup is important you should consider the impact your divorce might have on your employees, co-founders, and investors. When they got involved in your business they didn’t agree to get into business with your soon to be ex-spouse. They chose to do business with you.
More than a decade ago, one of my business partners went through a messy divorce and it almost destroyed our business. Fortunately he was able to pay his lawyers a king’s ransom to safeguard the business we had spent years building. Several years later he was in love once again and I was concerned that we might go through a similar ordeal. I suggested that he get a prenup and he agreed; however, week after week passed and it became clear he was never going to do it on his own.
I’m a problem solver so I suggested that we change our shareholder agreement to include a clause that required either of us to enter into mutually agreeable prenuptial agreement in the event that we married while our corporation was in existence. My partner was able to share the clause with his fiance and as a result I took the blame for his prenup. Less than nine months later they were divorced and my partner was forever appreciative and his ex was forever my enemy.
I would recommend that all Gen Z founders include a similar clause in their shareholder agreements whenever they start a new company. At the end of the day, if you don’t think the terms of your resulting divorce were fair you can always give your money to your ex, but at least it won’t negatively impact your employees, co-founders, or investors.
About The Author
Alexander Muse is a serial entrepreneur, author of the StartupMuse and Sous Vide Science, contributor to Forbes and managing partner of Sumo. Check out his podcast on iTunes. You can connect with him on Twitter, Facebook, LinkedIn and Instagram.