Business partner divorce

If you are in business with someone going through a divorce the fear that your co-owner’s changed financial circumstances could threaten your business is understandable. But it’s important to realise that it is difficult for a court to unilaterally make an order in divorce proceedings that could affect third parties such as a business partner. There are also ways your business can proactively try to ring fence the business so that it is protected during the divorce of someone who has a share in it.

Business share as a financial resource

When reaching decisions on finances in a divorce, courts must take into account the factors set out in the Matrimonial Causes Act, 1973. These include the financial resources of the parties. Arguably a share in a business is a financial resource. If the business is owned entirely by one spouse (or it’s owned between the spouses) it will be included in the pot of assets to be divided just like any other asset such as a house or pension. If however the business is owned with non-family members the courts are more restricted in how they can treat it. That’s because of the potential for other shareholders or partners to be adversely affected.

Valuing the business

A value must be attached to the business interest during the divorce process. For some businesses this process is straightforward. For example a service company without fixed assets where only the income needs to be established. Where the business comprises substantial assets such as property or machinery it may be necessary to involve a forensic accountant to attach a realistic value to it.

The valuation exercise may serve simply to establish that, when other assets are taken into account, the business interest is insignificant and does not need to be examined in any detail.

How well established is the business?

Of course there is always the potential for one spouse to place some of his or her assets beyond the reach of the other by investing in a business with an outsider ahead of a divorce. The courts however are likely to view such behaviour as an attempt to hide assets and intervene. And they have a wide discretion to do so. For example, in the 2015 case of Prest v Prest the Supreme Court looked behind a business structure created by a divorcing husband and ordered a multi-million pound property portfolio owned by a company to be transferred to the wife – even though in strict legal terms the company and not the husband owned the property.

Following the decision in Prest some thought courts had much more flexibility to interfere in business in which one party to a divorce owned a share. In reality however where a business is well established with several years accounts and returns available for scrutiny and where there are other shareholders and partners a court is unlikely to interfere in a way that could undermine the business. Although the value of the divorcing owner’s share will be taken into account in a financial settlement.

Can I protect the business in the event of a divorce of a co-owner

There are steps you should consider taking to protect a business in the event of an owner’s divorce. These include:

  • amending your shareholders agreement – If the business is a limited company you should ensure the shareholder agreement contains a method for valuation of any shareholding in the event of divorce. The agreement may also specify what shareholders must agree to. For example is shareholder consent required for an interest to be transferred to a shareholder’s spouse
  • amending a partnership agreement – If you are in a partnership you should ensure the agreement anticipates the divorce of a partner
  • entering Pre-nuptial and post-nuptial agreements – You can increase the chances of protecting your business interests by agreement with your spouse provided the formalities for these types of agreement are observed

Got a question? Ask us now…

Kindly complete the form below to send an enquiry. Your message will be sent to one of our solicitors. Discretion is guaranteed.

Your Information

  • Consider including information such as: the name of your spouse (if relevant), the country you live in, the background to your problem.

  • This field is for validation purposes and should be left unchanged.
This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.

Over 2000 FREE
consultations and counting…

Our free consultation can help you more clearly understand the legal issues relating your case and what your options are to move forward.

Request your free consultation

Or send us an enquiry

Today I had my free initial consultation with partner Henry Brookman over the phone. He had a clear understanding of my situation based on the info I provided in advance and provided me with sound advice and guidance to move forward. Many thanks.

Aug 2022   H. J.

Really appreciated Brookman's advice and support. Most lawyers charge extortionate fees just for an initial conversation but not Henry. Thanks for all your advice and time.

Jul 2022   Chloé

I had a consultation with the partner Henry Brookman. I can absolutely recommend him, he seemed knowledgeable, up to date and patient. I have found him to be straightforward in the answers he gives and down to earth. 100% recommended.

Jun 2022   Michael P

I have no hesitation whatsoever in recommending Henry Brookman. His advice came in promptly when solicited, and was excellent. He is a thoughtful and very professional lawyer. He understood perfectly well the issue I presented him with, and gave me excellent advice in a family law related matter.

May 2022   Philip Hands

From my first contact with the firm I was treated courteously and promptly. I was offered a pro bono meeting shortly after making contact. Mr Brookman is clearly a very experienced professional and in our meeting he gave me some well considered and objective advice about my rather complicated situation which spans more than one jurisdiction.

May 2022   Julian Peachey

I had an initial consultation with Henry Brookman regarding prenuptial agreements and found him to be very helpful and knowledgeable.

Mar 2022   Simon Brooks

I had a free telephone consultation yesterday with Gavin Yeung. He could not have been more helpful and reassuring as he calmly and patiently worked through my situation to provide me with clarity and piece of mind at a time it was really needed and emotions are running high.

Mar 2022   'K M'

I spoke with Aziz at Brookman Solicitors on the phone for an initial consultation and he is one of the friendliest lawyers I have met. He is clearly very experienced as he patiently explained me all the concepts and processes which are quite daunting for someone in my situation, and then focused on the actual questions I wanted to ask... I would highly recommend Aziz and Brookman Solicitors.

Feb 2022   'R'

I am grateful for Henry Brookman and his team for support they provided to me during very frustrating time of divorce. They respond promptly to any request. I felt more confident after I started the process with them. Henry listened carefully to me and took quick actions on my case. I highly recommend this team of real professionals even for non-UK citizens.

Feb 2022   Sezim Beksultanova

I had online consultation with the partner Henry Brookman today. I was very happy with the service. I found him to be very insightful, knowledgeable and provided sound advice, as well as being kind and patient. It was a very comfortable discussion and he sent an email detailing our discussion very quickly discussing in our meeting in depth. I am amazed by the service we got just from a free consultation. I would highly recommend these solicitors!

Jan 2022   Shirley Christopher

We spoke at length and at no point felt like he was rushing us and we felt very comfortable. After our discussion we were also quickly sent an email detailing everything we were discussing in our meeting in depth. I am amazed by the service we got just from a free consultation. I would highly recommend these solicitors!

Dec 2021   Tina

I was fortunate to spend an hour running through a few questions with Natasha Slabas. She was quick to grasp the points raised and proposed a sensible way forward. Would recommend

Dec 2021   Nick Powell

I cannot praise the professionalism and courtesy too highly. The advice given in a very complex divorce matter, was clear, concise, enlightening and inspiring.

Nov 2021   Mary Barn

I contacted Henry Brookman because of the complex international aspect of my divorce and I’m very glad I did... Henry took his time explaining all the pro’s and contra’s... I now have a much clearer view over the situation and feel more confident going forward. I’m very grateful for the excellent advice I’ve received and not feeling rushed during the meeting.

Nov 2021   'A B'

Talitha offers sound advice, asks the right questions and advises you with what you need to know not just what you want to hear. I have no hesitation in recommending her services.

Sep 2021   Anu Vidyarthi

Google Reviews
Ask A Question

Contact Us

If you have questions, contact us now, we can help you.

Enquire Now

Or call us on +44 (0)20 7430 8470