Many of us lament the high divorce rate that bounces around 50 percent - that is, nearly half of all marriages end in divorce. As sad as that is, however, I believe that the rate of "divorce" among business partnerships is even higher.

Just this week I heard two speakers relate stories of business partnerships that ended in financial ruin. Surely common sense demands that partners consider, before they enter partnerships, how they are going to peacefully resolve differences so the cost of unwinding a business relationship doesn't have to be such a calamity.

One of the speakers told of giving his first employee 20 percent of the company, making him a partner just for joining him in the venture. He also gave the accountant who set up his books and the attorney who organized the corporation a share of the company in lieu of payment.

Both these acts of generosity were made with little thought of the long-term ramifications or even the value of the stock compared to the fees these professionals would have charged. The fact is, passing out stock shares willy-nilly to early employees is not only foolish, but also can cause the collapse of a company when outside money must be raised. In one of the cases presented by the speaker, outside investors learned that the company's founder controlled less than a majority of the stock. They soon forced him out as president of the company.

Lest some of my readers think I am talking about them - and I might be - you should know that this is not a rare story. I can cite at least a dozen similar stories that have been related to me over the years.

Here are some suggestions for ways to prevent dilution of corporate ownership:

• Use phantom stock. This has almost all the benefits of stock. In fact, it has as many benefits as you wish to grant it. But phantom stock does not represent actual, legal ownership unless you make it so. This can help minimize a host of problems, including IRS liens and divorce settlement issues.
• Give those who perform organization services notes payable rather than stock. Giving a lawyer 10 percent of the stock in your company in exchange for doing your incorporation papers may seem like a good idea now because it saves you that $2,500 legal fee. But it's not going to seem like such a great deal in a few years when the company is worth $1.5 million and his stock is worth $150,000. That kind of an exchange just doesn't make any economic sense, especially when there are plenty of professionals who will help you set up your business for notes payable.

• Use rights of first refusal among partners as well as disposal and transferring restrictions. Some partnership agreements require consent of all stock owners before stock can be sold, assigned, transferred, pledged otherwise encumbered.

I know that even with a tight partnership agreement and shareholders' buy-sell agreements signed and in place, problems can occur. More than one former partner has applied to his partnership the cliché that is most often applied to boat ownership: "The two happiest days in my life were the day we started the partnership and the day we ended it."

Ending partnerships will be a lot easier and more pleasant if tight partnerships and shareholders' buy-sell agreements are in place before the business venture is even started.