Mark Pincus may not be an immediately recognizable name, but he owns portions of two companies whose names are household words: Twitter and Facebook. He also owns 10 percent of Zynga, a successful video game publisher. His wife Alison has recently announced that she is seeking a divorce and that she intends to challenge the validity of the couple’s prenuptial agreement to obtain a more favorable property division than the agreement would give her.

If Ms. Pincus is successful in her challenge, this divorce will demonstrate how the end of a marriage can have repercussions on the couple’s business holdings. In order to have the prenuptial agreement declared invalid, Ms. Pincus must prove that she was either unrepresented by competent legal counsel when she signed it or that Mr. Pincus failed to disclose all of his assets prior to execution of the agreement. The exact terms of the Pincus prenuptial agreement have not been publicly disclosed.

As noted, Mr. Pincus owns only 10% of Zynga’s common stock, but according to the company’s most recent proxy statement, the manner in which Zynga’s shareholder votes are apportioned among the various classes of stock gives Mr. Pincus control of about 70% of shareholder votes. A victory by Ms. Pincus in challenging the prenuptial agreement could cause a major shake-up in the company’s management with unforeseeable consequences. Mr. Pincus’ stock in Zynga is currently valued at about $254 million. A successful challenge to the prenuptial agreement may force him to sell a significant portions of his holdings.

Anyone who is contemplating a divorce that may involve significant interests in various business entities may wish to consult a knowledgeable lawyer about the ripple effects of the divorce on the couple’s assets. An experienced attorney can provide advice on the tax implications of selling stock during the divorce, management control issues and identifying which assets to liquidate.

Source: San Francisco Chronicle, “Divorce may loosen Pincus’ grip on Zynga,” Thomas Lee, April 5, 2017