Ex-Husband/Biz Partner Out of Control - What to Do?
A fabulous female founder finds herself in a horrendous situation
Derived from an interaction in Fall, 2020.
Dear FFF,
I think I’m losing my mind. My company offers adoption software; we’ve been in business for a decade, and have a stable client base. I’m the co-founder along with my now ex-husband. Until now, it’s been a good business for us. We had big plans, too, to widen our market and go international.
The problem? My ex-husband/co-founder built the code and is our lead engineer. He’s bipolar, off his meds, and spiraling downward. I haven’t seen him in days and am afraid he’s going to wreck the code. My son has special needs; he hates online school. Every day is torture for us both.
I’m a mess. I want to sell the company to our largest client, but they’ve offered me a fraction of what I think it’s worth. Should I just take it and walk away before my ex damages or locks down the code? How do I get a valuation done quickly?
—Hijacked by Life
Dear Hijacked,
Ugh, I’m so sorry you are going through this. That sounds terribly stressful all around. I can only imagine the load you’re carrying.
First and foremost, how are you taking care of yourself? Sleep, diet, exercise, therapy, meditation, yoga, nature walks, silly movies, time with friends, religious services? I urge you to seek help and prioritize your mental and physical health during this challenging time.
I also urge you to not panic, although I know that’s easy for me to say since I’m not in your shoes and only know a tiny piece of your situation. Can you take a few days off, go somewhere with your son, focus on getting to a better emotional place?
Hijacked, let me share a story. In 2012, I came to learn that my operations company did not have control over the software we were running, putting us in a terrible bind. We were already operating three systems (in Melbourne, Boston, and Washington, D.C.) and had won contracts for five more systems. Unbeknownst to us, our supplier ditched its software provider and hired a different company to rebuild the software from scratch, throwing all five of the new systems into limbo, causing delays, bad publicity, cash flow crises, missed deadlines, and more.
During the initial part of this crisis, I was on maternity leave (with my third child, an unexpected pregnancy at age 45 - oops!). When I returned and grasped the gravity of the situation, I insisted we should withhold payments to the supplier until they fixed the software. After all, they had clearly breached our contract! All our problems were their fault!
That was when I learned that we didn’t have control of the software; the supplier did, and could simply shut down our three existing systems. Indeed, they threatened to do just that, which would have brought our entire company down and triggered massive personal liability. The reason we lacked control of the software is a story for another time; suffice it to say that it was due to a choice made by one of my business partners in a moment of extreme duress.
When in danger, our fight or flight instincts take over. I desperately wanted to run and hide, to hand over the whole shitshow to someone else and be done with it. I understand why you do as well. But sell your company for peanuts? After all you’ve put into it? Please, if at all possible, don’t.
Be Proactive as You Evaluate Your Options
Do you or other staff have access to the code? Is it possible to monitor what your ex does or lock him out if needed? Who can you reach out to with legal and/or technical knowledge to help you through this, perhaps a law firm with expertise in software, business partnerships, and sales transactions? They can recommend a company to do to a proper valuation. Can you stall your discussions with your client/prospective buyer until you have that in hand? Who can help with your son so you can focus your energy on this?
When my company was in distress, competitors and financial institutions started circling like sharks smelling blood in water. What saved us was hiring a bulldog of a lawyer who brought in financial and software experts. What helped me emotionally was fighting the urge to panic and instead taking it one day at a time, sometimes one hour at a time, breaking down our problems into bite-sized chunks.
Ultimately, we did sell our company for a good price, good payback for all the risks we took and effort we put in. I am really hoping you can do the same.
Sending you hugs and waves of supportive energy from me and all the fabulous female founders who have faced tough times.
—FFF