Personal

Dividing a Business in a Divorce

Our divorce solicitors specialise in helping couples who are separating to agree on how best to split their business assets to ensure a fair outcome that meets the best interests of you and your family.

SOLVING PERSONAL LEGAL MATTERS

Valuing a family business during a divorce or civil partnership dissolution - whether it's owned by one or both of you - can be a complicated issue since there are a number of factors which need to be taken into account. Forbes Solicitors have a specialist team who are experts in helping divorcing couples agree on how best to split their business assets to ensure a fair outcome that meets the best interests of you and your family.

In England, Wales and Northern Ireland, any business interests - and their respective value - can usually be examined as 'matrimonial assets' which are to be divided between partners in the event of a divorce or dissolution, although that doesn't necessarily mean that the court will break up the business. In most cases - as long as it is possible - the business owner will usually be left with the business, while the other partner will be compensated with a larger share of other assets or maintenance payments. However, in some cases it is possible to split the income or shares to equally provide for both parties.

Valuing a Business during a Divorce

When it comes to valuing a business, this will normally be done if you and/or your partner own a business outright or is a significant shareholder. This valuation will be taken into account when the court decides upon a financial settlement. Either of you can arrange a valuation for shared business interests, but usually if just one person owns it (whether alone or with others) they would be the one to request a valuation.

The valuation can be a complex process as it depends upon:

Income
The standard of living that the business supports
Assets such as property, vehicles etc.
The value of personal and business pensions
Whether or not it is possible to extract capital sums from the business
Whether or not it is possible to borrow money against the business or its assets
The ownership structure of the company

As it is so complex, a specialist accountant will usually need to be consulted for an accurate valuation.

If you can agree with your spouse or partner on the value of the business, then the process will be more straightforward and less costly. However, many divorcing couples don't agree on the value of business assets - particularly if one partner appears to be undervaluing them. Forbes Solicitors can assist here by assessing the true worth of business assets and resolving disputes.

What happens after the Business is valued?

Once the business is valued, how it is treated by the court is dependent on the ownership structure. If, for instance, it is owned outright by one or both spouses, it will be treated as another marital asset. If, however, it's owned by a group of people and the divorcing spouse is a minority shareholder, it is merely the value of the shareholding that is relevant.

Dividing business assets after a divorce can be a minefield, adding to what is already a turbulent time for you.