When a couple divorces, or dissolves their civil partnership, there are lots of different factors to be taken into account when agreeing how to divide up the assets, and business interests and their value form part of these negotiations.
Where possible, the courts tend to leave the business owner with the business and to compensate the other partner with a larger share of the other assets and/or maintenance. This is often what the couple want themselves. However, the courts can be flexible and, for example, it may be possible for the couple to share the income or divide the shares.
Valuing a business
The process of valuing a business may not be straightforward, especially if it is privately owned. Valuing the business may depend on:
- The structure of the business (whether it is a limited company, sole trader or partnership).
- Its earnings and future profit.
- Its assets, such as stock or property that it owns.
This process can be complicated and costly, so before you instruct an expert it is a good idea to get some legal advice.
What if the value of a business is not agreed?
Couples who are divorcing or dissolving their civil partnership may not always agree about how much a business is worth, especially if only one partner is involved in it. If you do not agree with the value proposed by your ex-partner, or if he or she is being uncooperative, you can apply to the court to get information from their bank or accountant directly.
Bear in mind that:
- Using experts to help you get a true value of the business can be expensive.
- The fortunes of the business may have recently taken a turn for the worse. Just because the business was doing well last year does not mean it is doing well now.
- Business owners can be optimistic about their own business and you may have been led to believe that it was much more profitable than it really is.
How to resolve this
If you think that your ex-partner has undervalued the business you have several options including:
- Investigating the company books.
- Appointing an expert to value the business, either as a joint expert or each appointing your own.
- Trying to resolve matters via mediation etc.
If you need advice on a family law matter, get in touch with us on 020 7226 0570 or email Sheldon Henry at Sheldon@gelbergs.co.uk
Published 10 March 2017