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Divorce with a business involved

Some of the most valuable assets to be considered in settlements are often business or company assets and so these business interests need to be accurately valued. When the fate of your business and livelihood potentially on the line, it is vital to get this right.

In most cases, it will be necessary to instruct a forensic accountant to prepare a valuation report. The costs of these reports are typically borne equally in the first instance.

In addition to providing a valuation, single joint experts can usually be asked to opine on factors such as liquidity, sustainable income and the tax implications on disposal of the parties interest(s) in every relevant business.

Upon receipt of the report, the parties have the opportunity to ask questions of the expert and, if necessary, their valuation methods for the business. In circumstances where there are a variety of ways provide valuation, there is the potential for disagreement as to the most appropriate method depending on the nature of the business itself. Use of an unsuitable valuation method has the potential to impact significantly the resulting value of the business, and it is therefore important to challenge any valuation methodology which may be inappropriate at this stage. 

Once the valuation process is complete, how that value is ultimately divided is dependent on a number of factors.

Where desired and achievable, a business will usually be left with the founding party, whilst the value of the other partys share, if any, is offset by other assets available, such as cash or property. Wherever possible, a court will want to avoid the parties remaining as co-directors or shareholders in a business following a divorce.

Another important consideration is the genesis of the business. Because of this, the court will consider whether it was founded during the marriage, or brought into the marriage by one of the parties. If the business was founded prior to the marriage, the court will look at the extent to which it has grown during the marriage period in deciding what proportion of the value of the business could be said to be matrimonial, and thus available for division.

Vardags regularly act for parties with a variety of business interests. We have a dedicated in-house valuations and forensic financials team, and a track record of successfully challenging single joint expert valuation reports to ensure the best results for our clients and their business interests.

The information on this website is intended as a guide and does not constitute legal advice. Vardags do not accept liability for any errors in the information on this website, nor any losses stemming from reliance upon the statements made herein. All articles and pages aim to reflect the legal position at time they were published, and may have been rendered obsolete by subsequent developments in the law. Should you require specialist advice, tailored to your situation, please see how Vardags can help you.

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