Companies and Divorce

Your business is an asset. But it is also more than that.

For business owners going through divorce, the stakes are considerably higher than for most. A company you've spent years building, a shareholding you've carefully structured, a business that employs staff and supports a family, these are not simply lines on a financial statement.

But in divorce proceedings, they will be treated as part of the matrimonial pot unless there are good reasons to argue otherwise. How your business is dealt with in a financial settlement can determine whether it survives intact, has to be restructured, or in the worst cases has to be sold.

Early, specialist advice makes a real difference.

How Courts Treat Business Interests

Business assets are subject to the same principles as any other matrimonial asset. The court will look at the overall picture and seek a fair division, taking into account both parties' needs, contributions and future earning capacity.

However, the way in which business assets are valued and treated can vary significantly depending on:

• Whether the business was started before or during the marriage
• Whether it was brought in as inherited or gifted wealth
• How intertwined the business is with the couple's personal finances
• Whether the other spouse has made direct or indirect contributions to the business
• The structure of the business, whether sole trader, partnership, limited company or LLP
• The liquidity of the business and whether it can support a buy-out

Business Valuation

Agreeing on what a business is actually worth is often the most contested aspect of a divorce involving a company. Valuations can vary widely depending on the methodology used.

We work with experienced forensic accountants and business valuers who carry out independent assessments. Having the right valuation evidence from the outset can significantly affect the outcome of negotiations and any court proceedings.

Protecting the Business

Our aim is always to find a settlement that allows the business to continue operating. Options might include:

• A clean break settlement where one party receives other assets in lieu of a share of the business
• A structured buy-out of the other party's interest over time
• An agreement that one party retains shares but has limited rights
• Offsetting the business value against property or pension assets

The right approach depends on the nature and value of the business, the other assets available, and what both parties actually need going forward.

Shareholder Agreements and Pre-Nuptial Agreements

If you are going into business with others, a well-drafted shareholder agreement can include provisions that limit a divorcing shareholder's ability to transfer shares to a spouse or third party. This protects all shareholders and helps keep control of the business where it belongs.

Similarly, if you own a business and are planning to marry, a pre-nuptial agreement is well worth considering. It doesn't guarantee a particular outcome in court, but it can carry significant weight.

We advise on both.

Discretion

We understand that for business owners, privacy matters. We deal with a significant number of clients from the business and professional community across Gloucestershire and the wider Cotswolds. Everything is handled with the confidentiality you would expect.