By Michael Torney, J.D., CFP®, LL.M., CEPA
When everything’s running smoothly, it might feel unnecessary to plan for a disaster that may never come. Thinking about risks well before they arise isn’t a profitable task, after all.
But as the saying goes, “An ounce of prevention is worth a pound of cure.”
Disruptions in business rarely come with notice. Imagine you’re in a car accident on your way to work tomorrow morning. A hurricane floods your storefront. Your business partner announces a divorce.
When the unexpected does come, you, your family, your employees, and your partners could be left scrambling to sustain operations or regain financial footing. We call these potential disruptions the 5 D’s: death, disability, divorce, distress, and disagreement.
No matter what stage your business is in, it can be susceptible to the 5 D’s. But by understanding what they are and how to address them, you can better protect your financial world from unexpected disruptions.
Death
Considering the possibility of death is an important part of business succession planning, as well as personal estate planning.
You’ve likely thought about who should run the business when you’re ready to step down. But have you considered what happens to the business if that transition is forced to happen earlier than expected? If you’ve already identified your successor, are they prepared to step in immediately? And just as importantly, how would they acquire ownership of the business?
Without a clear plan, your family may be left with an illiquid asset and no defined path to convert that value into financial security. At the same time, the business may face operational disruption as leadership changes unexpectedly.
Some strategies for protecting your business, operations, and stakeholders need to be considered and implemented well in advance. A life insurance policy, for example, can provide liquidity to facilitate a transition or support the owner’s family. Buy-sell agreements can define how ownership transfers and how the estate is compensated.
Disability
If you’re unable to participate, let alone lead, the business—either temporarily or permanently—this raises some immediate concerns.
How will you generate income if you’re not actively working to drive business revenue? Who is authorized to make decisions, sign documents, or lead operations in your place?
Unlike death, disability does not always trigger a clean transition. You might still hold ownership and have all intentions to return. But as of now, you’re unable to fulfill your role, and the operational gaps don’t wait. If you’re the one filling the sales pipeline, that pipeline starts emptying the day you step away, and the revenue impact may not show up for months.
Without a plan addressing this specific circumstance, your employees, clients, and family may feel unclear on how to move forward.
You may want to consider income replacement strategies, such as disability insurance, to offer some stability for your family in the event you’re unable to work. On the business side, establishing clear delegation of authority and defined contingency roles can help keep operations going in your absence with minimal disruption.
Creating a well-documented plan that outlines who steps in and how decisions are made can significantly reduce risk.
Divorce
Of all the five risks, divorce is the one most business owners assume will never happen to them. But divorce doesn’t have to touch your own marriage to disrupt your business. Consider, even if your marriage stays strong, a partner’s marriage could end tomorrow and the impact on your business can be immediate and significant. If that happens, is your business prepared for the impact?
When a divorce involves a business interest, it can introduce a new and unintended stakeholder into the company. A spouse may become legally entitled to a portion of the business, despite not having a role in its operations. Suddenly, someone who has never sat in a meeting, signed a client, or driven a dollar of revenue has a legal claim to ownership. For that reason, divorce can complicate a business’s ownership structure, governance rules, and decision-making process overnight.
Without an established plan in place, divorce can be both financially and operationally disruptive. The business may be forced to find liquidity to satisfy a settlement, or ownership may become fragmented in ways that affect long-term stability.
Building a plan proactively, perhaps one that includes an ownership agreement, can help protect business interests before divorce ever becomes a reality.
Distress
Not all disruptions are tied to personal circumstances.
In the wealth management industry alone, firms have faced class action lawsuits for failing to protect sensitive client data. In several cases, firms were hacked, and client information was accessed and held for ransom in an attempt at extortion.1 In some cases, when decision-makers declined to pay, hackers released the data, and lawyers came calling soon after.
It’s nearly impossible to predict when something like this will hit your business, but if (or when) it does, it can create significant operational and financial strain.
While cybercrime is one common example, business distress can appear in many forms, including the loss of a major client, a legal dispute, or a broader economic shock. COVID-19 was perhaps the starkest recent example, and revealed just how unprepared many businesses were to operate differently on short notice.
These risks are often unrelated to the day-to-day work of the business, which makes them easy to underestimate or ignore altogether.
Despite the importance of simply being prepared, a business’s distress-prevention initiatives can impact its overall valuation—particularly when potential buyers come knocking. Companies with risk mitigation strategies in place are generally viewed as more resilient. Strategies might include:
- Insurance coverage (cyber, business interruption, etc.)
- Employee training programs
- Contingency plans
Without these protections, perceived risk increases, which can reduce valuation.
Disagreement
In businesses with multiple owners, disagreement is not a matter of if but when.
Differences in vision, timelines, and risk tolerance can emerge when two or more leaders work together. One partner may want to invest in growth, while another may prefer to reduce risk and prepare for retirement. Can one partner refuse to hire? Can the other force a capital investment? These differences can create tension, especially if there’s no framework for resolving them.
More complex scenarios can arise when ownership changes unexpectedly. If a partner dies, how is their interest valued? How is their estate compensated, and over what timeframe? If these questions are not addressed in advance, disputes can escalate quickly.
Disagreement can also extend to family dynamics in closely held businesses. Without clear expectations and communication, transitions can create lasting conflict.
Buy-sell arrangements, governance frameworks, and other written plans can help end disputes quickly (or avoid them altogether). These documents are used to establish processes for valuation, ownership transfer, and dispute resolution, reducing the likelihood of a conflict escalating into operational disruption.
The Importance of Having a Plan
A business with documented continuity plans, clear ownership structures, and defined risk mitigation strategies is often viewed as more valuable than one without. Regardless of where you are on your business journey, consider operating as if you’re ready to sell at all times. A sale might not actually be imminent, but that mindset better prepares you and your business when one of these events arrives unexpectedly.
For many business owners, the first step is simply starting the conversation. If you’re working with a wealth management team and the topics covered in this article have never come up, that’s worth paying attention to.
An advisor with experience in business owner planning can help you identify whether a plan is already in place and where gaps might exist currently. Just like visiting your primary care physician, they’ll assess the full picture, identify what needs attention, and refer you to the right specialists. In most cases, a few targeted questions can quickly reveal whether the key scenarios discussed here have been addressed.
From there, you and your advisor can coordinate with estate attorneys, business attorneys, CPAs, and other specialists to build a business continuity plan. As things change personally and in the business, you and your advisor will need to revisit existing plans to ensure they still reflect your evolving needs.
Protecting Your Family and Business From the “5 D’s”
The “5 D” risks are not tied to a specific stage of the business. They can occur at any time, whether the company is recently formed, well-established, or preparing for a sale.
Considering the risks and building a plan to address them can help you reduce uncertainty and protect your business’s value. If you’re a business owner thinking about how to safeguard your company and legacy, work with an advisor who understands these risks and can help build a business continuity plan alongside the right experts. To learn more about protecting your business against risks like these, submit your contact information today to request advisor outreach.
The 5 D’s — death, disability, divorce, distress, and disagreement — are five disruptions that can threaten a business unexpectedly. Each can impact operations, ownership structure, and financial stability with little warning. Business owners at any stage are vulnerable, making proactive planning essential to protecting the company’s value and continuity.
Without a succession plan, a business faces immediate leadership disruption and potential financial instability. The owner’s family may be left with an illiquid asset and no clear path to financial security. Tools like a buy-sell agreement and life insurance policy, established in advance, can ensure a smoother transition for all stakeholders.
Yes. If a business partner’s marriage ends, their spouse may become legally entitled to a share of the business despite having no operational role. This can disrupt ownership structure and decision-making immediately. A proactive ownership agreement established before any divorce proceedings can protect the business from this unintended outcome.
A buy-sell agreement is a legally binding document that defines how ownership transfers when a triggering event occurs — such as death, disability, or a partner’s departure. It establishes how the business is valued and how the departing owner is compensated. Any business with more than one owner should strongly consider having one in place.
The right time is before you need it. The 5 D’s can occur at any business stage — whether newly formed, well-established, or approaching a sale. An advisor experienced in business owner planning can identify gaps and coordinate with legal and financial specialists to build a plan that evolves alongside your business.
© 2026 Advisory services offered by Moneta Group Investment Advisors, LLC, (“MGIA”) an investment adviser registered with the Securities and Exchange Commission (“SEC”). MGIA is a wholly owned subsidiary of Moneta Group, LLC. Registration as an investment adviser does not imply a certain level of skill or training. The information contained herein is for informational purposes only, is not intended to be comprehensive or exclusive, and is based on materials deemed reliable, but the accuracy of which has not been verified. Trademarks and copyrights of materials referenced herein are the property of their respective owners. Index returns reflect total return, assuming reinvestment of dividends and interest. The returns do not reflect the effect of taxes and/or fees that an investor would incur. Examples contained herein are for illustrative purposes only based on generic assumptions. Given the dynamic nature of the subject matter and the environment in which this communication was written, the information contained herein is subject to change. This is not an offer to sell or buy securities, nor does it represent any specific recommendation. You should consult with an appropriately credentialed professional before making any financial, investment, tax or legal decision. An index is an unmanaged portfolio of specified securities and does not reflect any initial or ongoing expenses nor can it be invested in directly. Past performance is not indicative of future returns. All investments are subject to a risk of loss. Diversification and strategic asset allocation do not assure profit or protect against loss in declining markets. These materials do not take into consideration your personal circumstances, financial or otherwise.
