Dividing a Business in Divorce: What to Know

Is a Business a Marital Asset?

Yes - a business can be considered a marital asset—particularly if it was created during the marriage or if it increased in value while the parties were together. Even businesses started before marriage can be subject to division in certain circumstances.

The court will consider a variety of factors when deciding how to deal with a business asset during a divorce, including:

• The ownership and structure of the business
• Each parties contribution to the business (financial or otherwise)
• The value of the business
• Fairness
• The Section 25 factors, including the welfare of any children involved

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Valuing the Business

An accurate valuation will usually be required. This is normally done by an independent forensic accountant. It's crucial that both parties have access to financial disclosure. If one party attempts to hide or undervalue business interests, the court can penalise that party. 

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Possible Outcomes 

The Court’s priority is achieving a fair settlement. This does not always mean an equal split. There are several ways a business may be handled in a divorce:

• One Party Keeps the Business - Often, the business-owning party retains full ownership while the other party receives a larger share of other assets (e.g. the family home, pensions, savings).
• Buyout  - The non-owning spouse may be “bought out” of their interest, either through a lump sum or structured payments.
• Co-ownership  - In rare cases, if both parties wish to remain involved in the business, a co-ownership agreementmay be considered.
• Sale of the Business - The Court may order the business to be sold so the proceeds can be split. This is unusual as the business will provide income / employment for one or both parties.

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Protecting Your Business

If you are concerned about your business being affected by a divorce, there are proactive steps you can take:

• Pre-nuptial and post-nuptial agreements to ring-fence business assets
• Shareholder or partnership agreements that specify procedures in case of divorce
• Trust structures or corporate frameworks that separate personal and business finances

How Sugaré & Co Solicitors Can Help

At Sugaré & Co Solicitors, we have extensive experience advising business owners, entrepreneurs, and their partners on the division of business assets. Our method is discreet, strategic, and focused on achieving the best result for you.