The most brazen and desperate of damage-control tactics, of course, is to pull the plug on the business and shift the assets to some new -- and presumably, nonmarital -- property. Note the case of the California meat packer who stood up in the middle of his 1984 divorce trial to introduce his bankruptcy lawyer. In Pennsylvania, a woman who had started a company with her husband locked him out when the marriage failed, liquidated the assets, and transferred the proceeds to a second company. The court-appointed receiver stepped in just as a second liquidation was about to begin.
Even after a property settlement is negotiated or decreed, the judicial action can continue. There was the case of the Ohio watertreatment company, for example, which was valued by the entrepreneur's appraiser at about $1.7 million, by his wife's at about $5.5 million. The judge went a few months with the lower estimate. But after the final decree, it was learned that the entrepreneur had sold the business for $5.5 million. Upon the wife's motion, the Ohio Supreme Court sent the case back for some new arithmetic.
ALL THIS TALK OF financial maneuverings and their legal ramifications shouldn't obscure the obvious: divorce is, first and foremost, an intensely emotional experience. The entrepreneurs who hide money, devalue their companies, and otherwise pull out all the usual ethical stops when the adversary is a divorcing spouse, may appear to be contemptible human beings. Psychologists, however, say it's more likely that these people are responding, however inappropriately, to what they perceive as an almost life-threatening blow to their psyche. Is that blow any worse than any nonentrepreneur feels in similar circumstances? Emphatically, yes.
"There's a reason a guy calls his company 'my baby," explains Chicago business psychologists Bernard Liebowitz. "The threat of losing it is like losing a huge child-custody battle, or maybe worse. In one of those, at least you can still visit the kid when it's all over. Losing a company is different."
Such a loss, or the threat of one, is often referred to by psychologists as a "narcissistic injury." People who create companies invest "more than time and money," explains Carol Munschauer, a Buffalo clinical psychologist who has treated patients in both entrepreneurial and nonentrepreneurial divorces. "They really invest themselves, in the hope of achieving some sort of deep personal meaning. Maybe it's self-esteem they're after, or security, or power, or maybe even the approval of a parent. Whatever the business means to them, that's what's seen to be in jeopardy in a divorce. Even if there's no chance that the spouse will actually take the business, the entrepreneur often feels that he or she will be diminished somehow -- that he or she will not be regarded by the world in the same way. There's a loss of perspective, and, often, extremely exaggerated reactions."
When this narcissistic injury is combined with other character traits common to entrepreneurs, the result can be a long and messy divorce, says Liebowitz. "Some of these people, particularly the men, are often what I call bad controllers. While most good controllers understand that control is a give-and-take situation, these guys basically do not share what they perceive to be theirs.They are used to getting their way -- with employees, but particularly with a wife. By fighting for what's hers in a divorce, these guys often seen her as violating the basic rules between the sexes. They want to punish her. And because they see most situations in terms of winning or losing, they will keep fighting to win -- even if it means losing. Unlike a bad business deal, they won't give up."
There are others, however, whose reaction is not to fight at all. One New England builder's divorce, a decade ago, "so deteriorated him that he let the business cave in on him," recalls attorney Paul D. Pearson, of Boston's Hill & Barlow. "He wound up going through a forced liquidation, moving away from his family, and some time later, he was found dead of exposure on a Florida beach. Granted, the man probably had other problems. But the divorce was the visible beginning of the tailspin."
With that case behind him, Pearson now flatly advises his entrepreneurial clients to consider themselves emotionally disabled for the duration of their divorce proceedings, and he almost always suggests psychological therapy. Rare is the business, he counsels, that is not adversely affected by the founder's broken marriage. "I warn them that no matter how competent they've been, divorce will almost always, make them less so. They should expect distraction and a reduced capacity to concentrate. Having to shut the door once a day and cry shouldn't be considered uncommon."
Ellen V. B. Lapham, a Silicon Valley entrepreneur, traces the failure of her company to a series of difficulties that stemmed from the psychological stress of her split with her husband and co-founder. Syntauri Corp., whose key products were a piece of software and components for computerized music-synthesizers, was liquidated in 1984, at the age of four. It wasn't the divorce itself that was to blame; Lapham and her husband, software developer Scott Gibbs, reached an amicable divorce settlement -- one that called for them to go their separate business ways. The problems developed during the transition phase.
