Judy Rosenberg and Eliot Winograd have been business partners for 35 years as co-owners of Rosie’s Bakery, a 30-employee, $2.5 million Boston institution with four locations. Their marriage was less successful: It lasted two years, from 1979 to 1981, and “was not a good personal dynamic,” Rosenberg says. Despite their failure to make their marriage last, they attribute their ability to remain in business to mutual trust and admiration for each other’s business skills, among other reasons.
Figuring out how to sustain a family business after a divorce is important: Roughly 65 percent of U.S. businesses are family owned, with about 30 percent co-owned by spouses, estimates Glenn Muske, an entrepreneurship professor at North Dakota State University who has spent 14 years researching couples in business. Between 40 percent and 50 percent of all first marriages will end in divorce, a rate that has declined slightly over the past decade as marriage became less common, according to the National Center for Health Statistics.
After a divorce, couple-owned businesses tend to fold, get sold, or have one partner buy the other out, though “we do see [ex-spouses] remain in business,” says Muske. “They may find they don’t get along together at home, but they are great business partners and they’ve got a solid, going business that they don’t want to tear apart. If the business is performing in terms of dollars coming in, sometimes neither one can buy the other out, and they don’t want to split up the property.”
He notes that the fast growth in the number of women-owned businesses—up 54 percent over the past 15 years, according to a 2012 American Express (AXP)OPEN study (PDF)—requires coping skills, given that women increasingly found companies and then bring their husbands into management.
That’s what Suki Kramer, founder and president of $5 million Suki Skincare, in Northampton, Mass., did back in 2007. Kramer had started the company in her kitchen in 2002 and then asked her husband, Paul Rocha, to join as operations manager when the business gained national retail distribution through such outlets as Whole Foods (WFM). In 2010, the couple separated, but Rocha stayed on for two further years.
“We were friends for 11 years before we got together and we will always remain good friends, so for us it was perfectly O.K. [to continue working together], but it was probably harder for our employees,” says Kramer, who finally bought Rocha out last year. “They didn’t really know what the power structure was and they didn’t know sometimes what to do or who to go to when issues came up. I think they didn’t really believe we were on as good terms as we actually were.”
Navigating through such situations is important if a business enterprise is to move forward. It’s not easy: “When you get divorced, sometimes you want to go away and not see that person, but you can’t do that and run a business together. In the beginning, it was painful and uncomfortable seeing each other every day,” Winograd recalls. “But it’s sort of like having a child—you still both love the child even if you get divorced, and we both love this business and are very proud of it.”
Successful divorced business partners tend to retain basic trust in each other, take a mature attitude toward resolving arguments, and occupy clearly defined company roles that keep them from having to interact constantly, says Miriam Hawley, who operated a joint counseling practice with her husband, Jeffrey McIntyre, in Cambridge, Mass., for 30 years, co-authoring a book with him on entrepreneurial couples, You & Your Partner, Inc.
“They realize they need each other, and they are clear about what their strengths are and what each person contributes to the business they are passionate about,” says Hawley. Having a joint financial stake in a business is also a powerful motivator for couples to keep it up and running, even after their personal relationship has faltered.
That was the case at Rosie’s Bakery, says Rosenberg: “We both needed for the business to stay intact, and we both brought something. I was the inspired, creative one, but the business was in the red when I ran it alone because I didn’t really think about costing things out. He brought along the business side and we worked well and complemented each other.”
Over the years, she and Winograd have had their struggles, though they liken the relationship now to a brother-sister dynamic. “We adore each other most of the time, and then we have periods where we relate like six-year-olds, then somehow we get through it and keep going,” Rosenberg says.
Though many clients express surprise that divorced couples would choose to keep running companies together, it’s not all that strange, Hawley says. “One of the [divorced] business couples we interviewed for the book said there are three possibilities: Intimate partnership, friendship, and business partnership. And, he said, two out of the three are pretty good.”