Dividing Business Assets On Divorce

Dividing business assets as part of a divorce can be a minefield especially during what is often already a very unsettling time for the parties involved.

It can be a complex process, particularly if the business is a significant asset, and may require the expertise of lawyers, accountants, and valuers to determine the value of the business and how it should be divided.

In England any business interests and their respective value can be included as 'matrimonial assets' which are to be divided between parties in the event of a divorce. That means if you or your spouse own a business or have shares in one, when you get divorced those assets will be considered within the financial settlement.

In most cases, if 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.

There are four methods that the court may use to divide business assets upon divorce: outright sale, deferred sale, offsetting, and transfer of shares. It will also consider the wishes of both parties when determining the most suitable method. Regardless of what method is used, the business will need to be valued.

Determining the value of the business and the terms of payment for the other parties’ interest can be a challenge, because so much is riding on the outcome. However, having a conflict over the value of the business can become a protracted battle that will be very expensive and time consuming, which can be damaging for the parties and the business.

The most common approach to valuing a business for divorce is for an independent accountant to be appointed. Usually this is a joint instruction by both parties. The accountant will value the business taking into account various important factors, for example, the assets that the business owns, the business earnings and profit and the way the business has been set up. This will enable the accountant to provide a value of the business and to consider the options available and the tax implications.

Once values have been agreed the parties should then be encouraged to reach a mutually agreeable settlement through negotiation, mediation, or other non-court resolution options. This can be a more cost-effective and less adversarial approach. If an agreement cannot be reached and court proceedings are issued, then the court may impose a financial order specifying how the business assets should be divided.

At CWJ our dedicated team of experienced divorce solicitors specialise in handling cases involving businesses.  Our in-depth knowledge of family law and business matters enables us to provide tailored solutions that protect a business owner’s financial interests.

If you would like advice on dividing business assets as part of a divorce, contact Keith Doherty in our Family team on 01689 887887 or email keith.doherty@cwj.co.uk