Valuing a business during a divorce

Two-thirds of UK businesses are in family ownership, employing over 12 million people and, generating a quarter of our GDP, they are of immense value to the country.  But agreeing the value of each individual business is a complex matter which depends on many factors.

Helen Morgan, family law expert with Mooney Everett Solicitors in Ormskirk, Lancashire and Liverpool, explains that “agreeing a fair valuation for a business is necessary when a business owner gets divorced as part of the process to agree a financial settlement.”

Usually, it will be necessary to obtain an expert valuation of the business to see how much it is worth and, importantly, how much income it will produce.  Usually, only one expert will be allowed, so it will be up to you and your former partner to agree on who to use, often an accountant.

The key issues that will need to be considered include:

  • can money or assets be released from the business?
  • is a sale of the business realistic or easy to achieve?
  • are there rules setting out what happens to any shares?
  • are there any tax consequences in releasing funds or selling the business?

A common problem with family businesses is that there can sometimes be a blurring in the distinction between certain business and personal assets, such as an overseas property or company vehicles.

If you are thinking of getting divorced, don’t be tempted to try to artificially reduce the value of your business.  More than a few entrepreneurs have found themselves in trouble before the courts after trying to hide assets overseas or dispose of assets before launching divorce proceedings.

If you are getting divorced and need help in valuing your business as part of the process, please contact Helen Morgan on 01695 574111 or email email hidden; JavaScript is required.

The contents of this article are for the purposes of general awareness only.  They do not purport to constitute legal or professional advice.  The law may have changed since this article was published.   Readers should not act on the basis of the information included and should take appropriate professional advice upon their own particular circumstances.

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