Startup Interests in Dissolution of Marriage Cases - by Dale E. Johnson

Boulder enjoys a reputation as a great city for startup companies.  In 2013, The Boulder Daily Camera reported that Boulder was the top city in the United States for startups.  Startups are usually private (non-public) businesses with a group of creative individuals at the core.  If the startup ideas look promising, investors are attracted.  These investors are protective of disclosing the companies’ ideas and trade secrets and usually require all equity owners to sign non-disclosure agreements.

If someone who has an equity interest in a startup goes through a dissolution of marriage, the mandatory disclosure requirements under Colorado divorce law can create significant tensions with the other equity owners who do not want company secrets disclosed.  Further, until a company becomes publicly traded, valuing the interest of the equity owner for dissolution of marriage purposes can be highly subjective and expensive.  The family law professionals working with the parties need to understand the difficulties and complexities involved with startups and divorce.

Our firm has experience handling dissolution cases where startup interests are part of the marital estate.  The Colorado Lawyer, the monthly journal of the Colorado Bar Association, just published an article I wrote entitled, “Divorce in the Land of Startups,” which discusses these issues in more detail.  The original article can be found in the December 2014 issue of The Colorado Lawyer on pages 47-52 (volume 43).

If you or your spouse is an equity owner in a startup and are concerned about a dissolution of marriage action, please call our office at 303.666.4468 for a consultation.  Having more information about the pitfalls and complexities will help you make better choices regarding how to deal with that equity interest in the divorce.