We would like to place strictly necessary cookies and performance cookies on your computer to improve our website service.
To find out more about how we use cookies and how you can change your cookies settings, please read our  cookies statement.                
Otherwise, we'll assume you are OK to continue.   Please close this message

Dealing with a Family Business

The existence of a business in the 'matrimonial pot' of assets – regardless of its provenance (be it an inherited family business, a partnership started by the couple themselves or a new venture started by one of you prior to or during the marriage) - can throw up a number of different and complex considerations when looking at the division of finances upon divorce.

Some of the more obvious issues which might arise include:

  • Correctly valuing the business or share in the business
  • Preserving the business interest and income stream derived from it whilst providing fairly for both of you or
  • Dealing fairly with the business bearing in mind its provenance eg if inherited or jointly established.

Less obvious considerations may also arise, including the requirement for careful tax structuring, the need to maintain stability within the business if, for example, there is a liquidity call, and the existence of restrictions on the sale and transfer of shares amongst others. It may be appropriate to consider giving one of you a greater share of the “pot” than you might otherwise have been entitled to, to reflect the inherent risk and likely illiquidity of taking on the business.

The family courts have a broad discretion when assessing the most appropriate way to deal with all assets upon divorce, including the family business.  The aim is to achieve a 'fair' outcome and where possible they will seek to preserve the 'goose which lays the golden egg' and to deal fairly with inherited property, for example.  However, that rule is not sacrosanct and if fairness requires the sale of all or part of a family business then that can be ordered. As one of the Family Division High Court Judges has said, “…the goose may well have to go to market for sale, but if it is necessary to sell her it is essential that her condition be such that her egg laying abilities are damaged as little as possible in the process.  Otherwise there is a danger that the full value of the goose will not be achieved and the underlying basis of any order will turn out to be flawed.”

We can advise you throughout this process on any issue which may be thrown up by the existence of a family business.   We have close links with accountants and other professionals who may be needed to value a business interest or provide tax advice and we also have a large company commercial team who can advise on the restructuring of businesses, shareholders agreements, share transfers etc.  We can also advise on ways to protect your interest in a family business by, for example, entering into a pre or post-nuptial agreement and/or our business owners group can also assist.