Business and divorce

Our divorce solicitors understand that divorce can be a difficult and emotional time, especially when it involves a business.

Our team of experienced divorce law solicitors are here to guide you through the process of business and divorce, ensuring that your interests are protected and the best possible outcome is achieved. We provide tailored advice and support to help you navigate the complexities of dividing business assets and safeguarding your financial future.

Company structures and the ability to extract cash from the business can make it difficult to assign assets to a spouse, while maintaining the company’s integrity, so an understanding of company and related tax law is essential to coming to an outcome which is both practical and tax efficient. Our expert divorce lawyers can help you come to the best possible agreement.

What happens to a business in a divorce?

In a divorce, a business can be treated as a marital asset, meaning that it could be subject to division between the spouses. The value of the business will be determined, and either one spouse can be awarded ownership or the business can be sold and the proceeds divided. The approach will depend on the specific circumstances of the case, including the length of the marriage, the contributions of each spouse, and the future potential of the business.

Is a solicitor needed when dividing business assets in a divorce?

A divorce that involves a company will need a specialist solicitor with business expertise. Sometimes there are complicated company structures, which can make distributing assets to settle a divorce complex and challenging. It’s important to protect the integrity of the company as far as possible, so the trade is not compromised, while still managing the spouse’s expectations.

You may have started the business or been running it for some time and believe that what you’ve put in should remain entirely yours. If your spouse was running the business, you may feel your support entitles you to a share. It can be difficult to reconcile both sides of the argument. That’s where Moore Barlow can help.

How to value a business for a divorce?

Divorce, when you own a business together, can add an extra headache. In England and Wales, any business interests and values contained in them can be seen as ‘matrimonial assets’ to be divided up in a divorce, this is sometimes the case even if the business was set up before the marriage began, particularly in a long marriage.

If you own a business together, or it is otherwise considered a marital asset, the business will most likely be valued for the financial settlement. When valuing a business for divorce, the following is taken into consideration:

• The assets the business owns (e.g. stock, property)
• Its earnings, this includes the profits that have been made and are expected to be made in the future
• The structure and ownership of the business (e.g. if it’s a partnership, sole trader or a limited company)
• Any shareholder agreements
• Whether there are any third party interests
• Liabilities including tax
• Liquidity and the possibility of capital extraction
• Depending on the complexity of the businesses, it can be very costly to value the business. Before you begin the process of valuing the business, it is recommended to get legal advice.

Starting a business during a divorce and how to protect your business?

When you are actively going through a divorce, it can make starting a business all the more difficult. There are several additional factors you have to consider, as a new business could be considered a matrimonial asset that is to be included in the financial settlement. The best way to try to ensure that any new business you have set up is not a matrimonial asset include:

• Keep your business and personal/household finances completely separate: if there is any confusion or mixing of the two then all new business assets could be considered matrimonial and therefore part of what can be claimed in the financial settlement.
• Do not receive or seek out help from your spouse in the running or set up of the business: again if your spouse is considered to have contributed to the business in any way it could be claimed as a matrimonial asset.
• Do not hire your spouse/give them an official position or shareholding: even if they do not regularly work for the business sometimes spouses are detailed as a director, shareholder or company secretary.. This can be used as evidence that they worked for, or are, an owner of the company.