How can a business owner or company director effectively navigate the legal and financial complexities of divorce while controlling costs?
“For business owners and company directors, there is the additional worry about how divorce will affect the business and their future control and management of it.”
- Stephen Glover, Direct Access Barrister
Author
For every husband or wife, either thinking about separating from their spouse or who has just split up, there are the usual anxieties, relating to the children and their arrangements and the stress of adjusting to the additional costs and logistics moving from one to two households with no extra money to meet the extra costs.
For business owners and company directors, there is the additional worry about how divorce will affect the business and their future control and management of it. Assets have to be divided and where these include a business this inevitably makes it complicated.
When trying to negotiate terms of an out-of-court settlement, it is always necessary to ask the question: what is it likely that a court would order in these circumstances? One can then answer the next question: what is the best (agreed) alternative to litigation?
The court will need to understand the following:
- What is the ownership structure of the business and its assets?
- Is it a marital asset, or was it inherited or established before the marriage?
- If so, is it co-owned and co-run (and what are the viable management options going forward) if not, has it grown substantially since the marriage?
- What is the business worth, and how does that fit with the other assets in the pot, that has to be divided fairly?
- Is it the main source of income for one or both spouses?
- Are other people (as partners or shareholders) involved in the business?
There is no doubt that fighting over the accuracy of the answers to these subordinate questions makes any dispute complex, time-consuming and therefore costly.
As an entrepreneur, you spend your waking hours trying to get things done more simply, more quickly and/or more cheaply. Breaking up, it can feel that everything has been turned on its head, and your efforts seem ineffective to prevent things from suddenly being overly complicated, long-winded and wastefully expensive.
The range of answers to the particular conundrum you face may include:
- One party transferring or retaining the business (or the minority stake in it) as part of an overall asset split, thereby offsetting its value;
- Where that wouldn’t work, extracting cash from a liquid business by purchase of its own shares;
- Where illiquid, a deferred buy-out ie a postponed lump sum, to coincide with an exit strategy;
- Selling the business and dividing the sale proceeds (a last resort, if all else fails);
Whatever the fate of the business, there is the related question of whether it is feasible to achieve the desired “clean break”
Instruct a Direct Access Barrister
Each of the potential outcomes discussed will in turn depend on valuation, taxation and other expert issues. How to achieve this?
You need to engage a legal professional who you can be sure is experienced and able in both business and matrimonial legal affairs to guide you. But that is not all. You need to be able to cap or at least control the amount you are spending on such vital advice. The way this can be done is to instruct an experienced specialist barrister directly.
Get in touch
To discuss your position as a business owner when going through a divorce, please contact Stephen Glover’s Clerk at clerks@spirebarristers.co.uk
Click 'Find out more' for more information on instructing a barrister on a direct access basis.
Find out more