How to Safeguard your Empire During a Divorce
When Sandton tech-entrepreneur Michael Ndlovu (not client's real name) filed for divorce after 18 years of marriage, he assumed the fight would centre on the Camps Bay beach house and the collection of sports cars. Instead, his estranged spouse's attorneys targeted what mattered most to him: a 62 % shareholding in a rapidly growing software company worth more than R450 million.
Because Michael had never signed an antenuptial contract and had intertwined personal spending with company accounts, the court treated his shareholding as a marital asset. A drawn-out battle over the business's valuation left investors nervous, staff demoralised and a lucrative buy-out offer on hold. By the time a settlement was reached, Michael had ceded a significant stake, lost board control and spent millions in legal fees – damage that might easily have been avoided.
Below are the lessons every high-net-worth business owner should absorb long before they trade wedding vows – or divorce papers.
1. Anchor your assets with an Antenuptial Contract (ANC)
An ANC is not an admission of mistrust; it is a risk-management instrument. Structured correctly, it ring-fences shares, member's interests and partnership stakes from the joint estate while still allowing a spouse to benefit fairly from marital growth.
Insert tailored clauses that address future increases in share value, dividend flows and minority protections – otherwise your contract is little more than boiler-plate. A well-drafted ANC can also direct future disputes to private arbitration, shielding the company from public litigation that might spook lenders or clients.
2. Keep personal and corporate finances worlds apart
Courts scrutinise conduct, not claims. If you treat the company chequebook like a household purse – paying school fees, family holidays or domestic staff directly – expect a divorce court to do the same. Maintain arm's-length salary payments, charge legitimate director's fees and record shareholder loans formally.
Meticulous separation of accounts creates a paper trail that proves the business is a stand-alone asset, not a de facto marital bank account.
3. Build corporate walls: structure matters
Sole proprietorships and informal partnerships offer virtually no protection. Incorporate the business properly, issue share certificates, and – where appropriate – house intellectual property or key immovable assets in separate entities or trusts.
While trusts are no silver bullet (South African courts can pierce abusive arrangements), a well-governed trust, with independent trustees and audited accounts, can insulate strategic assets from matrimonial claims and help with generational succession planning.
4. Know your number before the storm hits
Valuation battles are the Achilles heel of entrepreneurial divorces. Two experts can reach wildly different figures, and the longer the argument drags on, the more leverage you lose. Commission a professional valuation while the marriage is stable; update it periodically; and retain the underlying financial models.
Entering negotiations with a credible, well-documented baseline shifts the burden of proof and often short-circuits inflated counter-claims.
5. Negotiate early, settle smart
Divorce litigation is public, expensive and emotionally corrosive. Private mediation – or even a pre-nuptial mediation clause – lets both parties craft bespoke solutions, perhaps trading shares for cash or alternative assets, before the dispute poisons the brand and distracts management.
Early settlement also reassures investors and employees that leadership remains steady, preserving enterprise value for everyone, spouse included.
The Bottom Line
Wealthy entrepreneurs devote years to building value; yet one poorly planned divorce can drain that value overnight. As our Corporate Structuring specialist here at Barnard, Dirk Swanepoel observes, "Good corporate governance and good marital planning are two sides of the same coin: both exist to protect what you have created."
If your personal life and your business life are inseparable on paper, they will be inseparable in court. Now is the moment – before love turns litigious – to review your corporate structures, financial practices and matrimonial agreements.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
