Business and Divorce: Dividing Company Assets in the UK

Business and Divorce: Dividing Company Assets in the UK
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If you own a company and are about to go through a divorce, it’s important to understand how assets could be divided during a financial settlement. In this article, we explore how those company assets are divided in a UK divorce and what you can do to protect your business.

Dividing assets in a divorce

It’s helpful to remember that while business assets are normally considered along with other matrimonial assets like property and pensions during a divorce, the UK courts do aim to prevent the sale of the business, even though this is not a certainty.

During any divorce, all joint financial assets and liabilities are taken into account. The courts usually take a 50:50 split approach in the beginning, taking into consideration the needs of children and their maintenance and housing requirements first, then looking at all other assets involved. This includes any pensions, investments, the family home and other properties. It also includes all businesses (even if only one spouse had direct involvement) and business interests such as company shares.

Dividing businesses

Both assets and liabilities belonging to the business will be explored, and this can become complex, for example, when a company owns property, or there are complicated tax implications involved. That’s why it’s important to fully understand your financial position from the start, plan effectively and seek out the various professionals you may need.

Valuing your business

One of the first experts you will need to seek the support of is a financial professional or specialist accountant who will be able to put a value on your business. This is important as it will help determine the final financial settlement. In order to provide an accurate valuation, they will look at factors such as sale prices of similar sized businesses, the income of the business, any assets the business owns, how the company is structured and whether or not it is achievable to extract money from the company.

As this process has the potential to become drawn out, it is often advisable for you and your ex to reach an agreement on how much you think the business is worth. Despite this, it is often the case that an ex-spouse cannot agree because they believe the other party is undervaluing the business in a bid to gain a more favourable financial settlement. If you believe that assets are being hidden, you should seek out the advice from an experienced family lawyer who may be able to investigate the company accounts in more detail.

Your options after the valuation

When a valuation has been agreed, there are then a number of avenues you can go down. What the courts ultimately decide will be based on various factors, including other joint assets and how the business is structured. For instance, if there are other shareholders within the company, it will only be the shares of the divorcing party/parties that will be considered. In many cases, it makes sense for one of the spouses to buy the other out of the business, especially if it is a private business. While in other situations, the sale of the business entirely may be necessary. Although it’s uncommon, some ex-couples decided to continue to run the business together after they have divorced.

Final thoughts

Whether the division of your business assets in your divorce holds the potential to be complicated, or if they seem straightforward, it’s always important to pause for thought and consider your options. Going through a long divorce process will likely be costly, so you should be prepared to negotiate and compromise to help make the process less stressful and expensive.


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