Divorce and The Family Business
The resolution of questions concerning family businesses can be difficult for a variety of reasons. Often there is significant capital tied up within a business which ought to be shared between the parties. Yet often the business is producing the income stream which maintains the family and this will be jeopardised by a sale or significant borrowing. There are sometimes practical issues such as how a sale is to be achieved or in what timescale and what the tax consequences may be. Matters can be complicated further if there are third parties involved – non family members who are partners or shareholders. This increases the risk that if matters cannot be agreed proceedings separate to the divorce may be necessary under the Partnership Act or Companies Act.
Things to think about when your case involves a family business:-
- We will need to see key documents such as Partnership Deeds/Shareholders Agreements and accounts.
- The first task will be to establish the value of the business. This may require valuation of assets (such as buildings) or in the case of profitable businesses a valuation by an accountant or business agent.
- We will explore with you the range of options which may include a sale, raising finances either immediately or by installments, transferring the business to one spouse upon terms – or occasionally even continuing the business with suitable protection built in for each party.
Each option contains pros and cons which we can explore with you.Reluctant Co-Directors/Partners can be compelled to provide financial disclosure – in appropriate situations.We are able to provide pragmatic and specialist advice in relation to marriage/relationship breakdown and family businesses.