We investigate the impact of CEO divorce on firm performance and examine how this relationship depends on the CEO’s life stage and the involvement of the CEO’s family in the firm. Using data from Statistics Sweden covering the period from 2004 to 2014, we tested our hypotheses using a difference-in-difference design on a matched sample of 2,336 firms, most of which are small firms. With our results we contribute to upper echelons theory by showing that CEO divorce negatively affects firm performance, and that this relationship strongly depends on the length of the marriage, the presence of children, as well as whether the CEO’s spouse and children work in the firm. We show that under certain conditions CEO divorce can even have a positive impact on firm performance, in particular in the presence of CEO’s children in the firm.