CLM Solicitors - Commercial Litigation - When Love Dies - Complex problems to unravel in a Family Business

When Love Dies - Complex problems to unravel in a Family Business

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Peter Berry

A marriage breakdown is a traumatic experience but as many business people find out, the problems that follow may not be just emotional ones. Peter Berry, solicitor with Charles Lucas & Marshall’s family law team and a specialist in financial claims, explains some of the complex business problems to unravel as a result of matrimonial difficulties.

Swindon is an exciting, pioneering town in which many small family businesses start and often grow into large and profitable ventures. Sadly, some of those businesses may be touched by the impact of a divorce.

Typical circumstances would be:

The husband and wife may have worked with each other to build their business over many years and both may be equally reluctant to give up their well-earned role in that business.
Sometimes one spouse not only owns the business but may be the entire driving force behind its development.
Businesses may have been transferred to younger members of the family often well before ‘Mum and Dad’s’ normal retirement age. The high incidence of divorce amongst younger generations could spell disaster for the young couple, together with Mum and Dad’s retirement income.
Spouses might be minority or majority shareholders and the impact of a divorce could have significant ramifications not only for them but also for other shareholders or partners alike.

Where partnerships or limited companies exist that involve non-family members, confidence and stability can be hit hard by the worry of divorce. The uncertainty can result in business partners moving to protect their own interests. Divisive power struggles can seriously destabilise the business, and possibly lead to premature closure.

It is the role of an experienced family lawyer to consider not only the practicalities of perhaps the husband and wife continuing to work beside each other in the business but also wider business implications and long term expectations.

An accurate analysis of the business interests of the parties may involve a wide range of issues; valuation of the shareholding itself and of the underlying company assets such as properties, vehicles, stock and good will. An analysis of the true earnings of the shareholders or partners including salary, dividends and benefits in kind will also be needed.

There may also be a need to examine the scope for raising funds to facilitate a settlement and an understanding of the tax consequences in extracting funds or imposing changes on the business structure is vital.

Can the business be divided once and for all or are there roles which each spouse can continue to fulfil? Will new articles, partnership or shareholder agreements be needed to deal with the issues that might arise.

A constructive approach to these questions is vital - along with avoiding conflict and embarrassment in an already emotionally charged situation. This is an increasingly challenging area of law, and instructing an experienced family lawyer at an early stage, can often help reduce the difficulties significantly.

For more information contact Peter Berry on 01793 511055 or peter.berry@clmlaw.co.uk

	When Love Dies - Complex problems to unravel in a Family Business
Just click on a link below Commercial Litigation When Love Dies MEET THE TEAM	Peter Berry A marriage breakdown is a traumatic experience but as many business people find out, the problems that follow may not be just emotional ones. Peter Berry, solicitor with Charles Lucas & Marshall’s family law team and a specialist in financial claims, explains some of the complex business problems to unravel as a result of matrimonial difficulties. Swindon is an exciting, pioneering town in which many small family businesses start and often grow into large and profitable ventures. Sadly, some of those businesses may be touched by the impact of a divorce. Typical circumstances would be: The husband and wife may have worked with each other to build their business over many years and both may be equally reluctant to give up their well-earned role in that business. Sometimes one spouse not only owns the business but may be the entire driving force behind its development. Businesses may have been transferred to younger members of the family often well before ‘Mum and Dad’s’ normal retirement age. The high incidence of divorce amongst younger generations could spell disaster for the young couple, together with Mum and Dad’s retirement income. Spouses might be minority or majority shareholders and the impact of a divorce could have significant ramifications not only for them but also for other shareholders or partners alike. Where partnerships or limited companies exist that involve non-family members, confidence and stability can be hit hard by the worry of divorce. The uncertainty can result in business partners moving to protect their own interests. Divisive power struggles can seriously destabilise the business, and possibly lead to premature closure. It is the role of an experienced family lawyer to consider not only the practicalities of perhaps the husband and wife continuing to work beside each other in the business but also wider business implications and long term expectations. An accurate analysis of the business interests of the parties may involve a wide range of issues; valuation of the shareholding itself and of the underlying company assets such as properties, vehicles, stock and good will. An analysis of the true earnings of the shareholders or partners including salary, dividends and benefits in kind will also be needed. There may also be a need to examine the scope for raising funds to facilitate a settlement and an understanding of the tax consequences in extracting funds or imposing changes on the business structure is vital. Can the business be divided once and for all or are there roles which each spouse can continue to fulfil? Will new articles, partnership or shareholder agreements be needed to deal with the issues that might arise. A constructive approach to these questions is vital - along with avoiding conflict and embarrassment in an already emotionally charged situation. This is an increasingly challenging area of law, and instructing an experienced family lawyer at an early stage, can often help reduce the difficulties significantly. For more information contact Peter Berry on 01793 511055 or peter.berry@clmlaw.co.uk