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Why tech founders may want prenuptial agreements

On Behalf of | Oct 16, 2019 | Divorce

Entrepreneurs may have little or nothing when they decide to get married. However, they may need to obtain a prenuptial agreement if they want to obtain outside investment in their companies. Founders in Arizona and elsewhere should also make sure that they will still have a controlling interest in their businesses if their marriages don’t work out. There are many examples of startup founders using custom divorce agreements to protect their companies.

For example, the founder of Oracle Corp. has been divorced several times without ceding shares to his former spouses. If a married individual wants to obtain venture capital, it may be necessary for both marriage partners to sign a consent form. The document clarifies when shares can be sold and the process for appointing board members. Generally, the goal is to ensure that a founder’s former spouse doesn’t have much power to influence the company after a marriage ends.

It is important to point out that venture capital firms generally don’t require married founders to have a formal prenuptial agreement. However, having one can make it easier for investors of any sort to have more trust in a brand and its long-term prospects.

It isn’t uncommon for a divorcing couple to dispute the value of an asset or who retains ownership of that asset. Therefore, it may be a good idea to negotiate a prenuptial agreement or a postnuptial agreement. This can help to clarify who owns an asset or how it is to be divided in a divorce. If the agreement is valid, it could help a couple finalize a split in a timely manner.

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