Can I Sell My Business Before a Divorce?

The divorce process can leave you feeling like you are in limbo, as you wait to see exactly what the result will be. Matters can become even more complicated when you are running your own business. So, can you sell your business before a divorce? Here, we look at some of the “pros” and “cons” of doing so.

Can I sell my business before a divorce?

The simple answer to this question is “yes” but bear in mind that if your partner finds out about the attempted sale, they may start divorce proceedings early and move for an injunction to block the sale.

If you see no alternative but to sell your business before a divorce, then you should think about several things before attempting a sale.

Things to consider before selling your business

The long-term effects of the decision

People naturally feel heightened emotions when a relationship breaks down. However, once divorce proceedings have been brought to a close, you may regret a rushed sale of your business. You might be able to look at the decision more objectively when the divorce is completed. Consider, for example, that selling your business takes away the chance for your children to take over your business, or for the business to grow and prosper.

Risk of sellers remorse

Your business might be in a slump at the time of a relationship breakdown, and you might be struggling to cope with running the business. The idea of capitalising a poorly-performing business is tempting. However, you never know when your luck might turn around. The next big idea could be around the corner, or a new trend might favour your industry. If your luck picks up then you can either carry on running the business or look to sell from a more beneficial position. By not allowing divorce to be a deciding factor in the sale of a business, you leave less room for seller’s remorse later on.

Timing of a sale

When selling a business, you need to know what the sale will mean for you. Speaking to financial and family lawyers, as well as an accountant, can be a great idea before starting the sale of your business. This is because the sale of a business can have tax implications.

The value of the business

The value of the business to you in practical terms might not be the same value that the court would attribute to the business. For example, if you have a share in a family business with your siblings, then the paper valuation of the business based on its turnover might not reflect the reality of the situation because you might be a minority shareholder or, if you are a majority shareholder, you might be subject to family pressures to not sell your shares, or sell them only to a particular person at a particular price.

You should be aware that if you sell your business for a particular value, then your partner may argue in divorce proceedings that the true value was in fact greater than what you sold it for.

A cleaner break for you and your partner

If you and your partner are joint owners of the business, then selling it before a divorce (to a third-party or to the other partner) could be sensible. It can be challenging if not practically impossible for divorced former partners to run a business after a divorce. Sharing a business can also complicate divorce proceedings. By selling the business and having clear figures from the sale, matrimonial assets can sometimes be more easily ascertained.

An opportunity for a fresh start

Selling a business is a big decision that is potentially life-changing. Perhaps you are tired of your industry and are looking for a change. Or maybe you want to retire. Divorce can be lengthy and complicated and, can “drag on”. By selling your business before the divorce, you will be able to make a clean break before the complications of divorce begin.

What is the court likely to make of it?

The powers of the Family Court on divorce are governed by the Matrimonial Causes Act 1973. Section 25 of the 1973 Act sets out the factors to be considered by the Family Court when making a financial order. The court will consider business assets as part of the section 25 exercise. For further information, see our article at:

How a family lawyer can support you with the process

Selling a business is a big decision to make. Here at Demstone Chambers our team of expert family lawyers (who are family law barristers) will be able to provide legal advice regarding your business assets. To find out more about how we can help you with a divorce when you own a business, please contact us today.


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