Divorce — what happens to my business in a financial settlement?

Originally published on 12 May 2023 and updated on 12 January 2026.

Divorce or the dissolution of a civil partnership can be challenging in any circumstances — but for business owners, the financial and practical questions can feel especially daunting. Issues around valuation, ownership and future income often require expert input and careful planning.

Here, family law specialist Katie Coleman explores how the Family Court deals with business assets, what to expect from the valuation process and how different types of businesses are assessed.

How does the Family Court deal with businesses on divorce?

The Family Court has a broad range of powers when dealing with financial claims on divorce and considers all assets and ‘financial resources’ of the couple, including any businesses. 

Before a financial settlement can be reached, the separating couple and the court will need to consider several factors, including the value and ownership of the business, contributions each party has made and impact that a financial settlement may have on its future viability or cash flow. It’s also important to consider any tax implications, including those arising from the transfer of shares or a potential cash extraction. 

The Family Court may also take into account any pre- or post-nuptial agreements that the couple entered into. These agreements can help to clarify how assets — including businesses — should be divided if the relationship ends. Although not legally binding, they’re generally upheld where both parties entered into them freely, understood their implications and it would be fair to hold them to the terms agreed.

What happens during a business valuation?

While in some cases parties will be able to determine the value of a business between themselves, the input of a single joint expert (usually a forensic accountant) is often required. The parties should therefore agree on who will act as in this role. During the valuation, a range of factors are examined to determine what the business is worth. 

These may include:

1. Financial statements — including balance sheet, income statement and cash flow statement to assess the business's profitability, liquidity and solvency.
2. Market conditions — including supply and demand for the business's products or services, as well as economic trends and forecasts.
3. Assets — including any property, equipment and inventory.
4. Liabilities — including any loans or outstanding debts.
5. Industry/sector trends — including the performance and value of similar businesses in the same industry.
6. Management and personnel — including the quality and experience of its people.
7. Intellectual property (IP) — such as patents or trademarks.
8. Future prospects — including potential growth opportunities, as well as risks and challenges.

The valuation report will then be used to inform negotiations between the parties or in court proceedings regarding the finances. It’s important that the valuer instructed is both experienced and impartial to ensure that everything is accurate and fair.

How are different types of business valued?

Businesses can have different characteristics that affect their value. 

Here are some examples:

1. Service-based businesses (e.g. consulting firms) — typically valued based on their revenue or profits. The valuation is often calculated based on a multiple of its earnings before interest, taxes, depreciation and amortisation (EBITDA), with the multiple depending on factors such as growth prospects, industry trends and market conditions.
2. Manufacturing businesses — usually hold a significant amount of tangible assets and are often valued based on a net asset basis. This involves calculating the value of the business's assets (such as machinery and inventory) and subtracting any liabilities to arrive at the net asset value.
3. Retail businesses (e.g. shops and stores) — often valued on their revenue and profitability. The valuation may be calculated based on a multiple of gross revenue or net profits, with the multiple influenced by factors such as location, customer base and growth prospects.
4. Technology businesses (e.g. software companies) — may be valued using a variety of factors including revenue, profits, IP and user base. These businesses often have intangible assets that are difficult to quantify (such as patents and trademarks) that can affect their overall value.

Businesses may require different valuation methods depending on their unique characteristics and the sector and geographical market they operate in. The single joint expert appointed will determine the most suitable approach. 

What can I do if I don’t agree with the business valuation?

If you believe that a business valuation is inaccurate, there are steps that you can take to dispute it. 

Primarily, you should review the valuation report carefully to understand the methods used by the valuer and assumptions made. This will help you to identify any areas of disagreement and give you a better understanding of how the value was calculated.

If you identify errors or omissions in the valuation report, raise them with the valuer and ask them to review and revise their report if necessary. Both parties will have the opportunity to ask the expert questions to clarify their report. Additionally, you may wish to gather evidence to support your position, including financial statements, tax returns or other documents that can demonstrate the business’s value. 

You may also need to consider engaging a ‘shadow accountant’ who can act on your behalf and check the work of any expert valuer. 

If the valuer was appointed by the court as a single joint expert, it’ll be harder to dispute the valuation. You’ll need to provide evidence to the court that demonstrates why the valuation is inaccurate which may include engaging a second expert witness to provide an alternative valuation or presenting evidence that contradicts the assumptions made by the original valuer. 

If this occurs, it’s crucial to seek expert legal advice to determine the best way forward. 

What orders can the Family Court make in respect of businesses?

The Family Court has wide ranging powers to make orders and businesses may be dealt with in several ways:

1. Transfer of shares — one party may be ordered to transfer their shares to the other. As a result, only one person will retain their interest in the business while the other receives their share of the value in the form of other assets, such as property or cash. This is common where the separating couple seek a ‘clean break’ after their divorce or dissolution and/or one person has a greater role or interest in the business.
2. Division of ownership — the ownership of the business may be divided between the parties with shares transferred so that both continue to own part of the business following their divorce or dissolution. This is less common as maintaining an ongoing business relationship isn’t generally desirable to separating couples.
3. Sale of the business — if neither of the above options are possible, the business may need to be sold. This can be a difficult decision, particularly if the business has been in the family for a long time. However, in some cases, it may be the only option to achieve a fair financial settlement.

Businesses may also be relevant when calculating spousal maintenance. The value of the business may be taken into account when assessing the income and future earning capacity of the spouse who relies on it. This can be a complex process as the court will need to balance the needs of that spouse with the needs of the other. 

It's also crucial to consider the tax consequences of dealing with businesses on divorce, whether this relates to the transfer of shareholdings or cash extraction to meet a financial settlement. Indemnities may also need to be given if one partner has previously been involved in the business but doesn’t intend to be in the future.

How can I protect my business from divorce?

When a business is involved, divorce can feel particularly overwhelming. We can help you to understand your options, work through valuation and settlement issues and protect your financial position both now and in the future.

We also advise on pre‑ and post‑nuptial agreements which can provide clarity and peace of mind for couples who want to safeguard business assets. 

As a full-service law firm, our corporate, employment and litigation teams provide support and advice to business owners going through divorce. This includes assisting with shareholder disputes and any issues that arise where a spouse is also an employee of the business.

Speak to our specialist divorce and financial settlement solicitors today by calling 0333 004 4488, emailing family@brabners.com or completing our contact form below.

If you’re looking for the very best in personal legal advice, discover Brabners Personal — our solution that provides you with easy access to a wealth of trusted experts who can help you to plan and protect your future.