What the service includes
Dividing a business on divorce is a separate service and should not be confused with dividing personal and household property. If the dispute concerns a flat, a car, a country house or accounts acquired during the marriage, that is the division of personal property and real estate on divorce, which we cover on a neighbouring page. Here we deal with a different asset: a stake in an LLC, a block of shares or an enterprise as a property complex, and the rules for dividing it are different.
As a general rule, a business interest acquired by either spouse during the marriage is treated as joint property, regardless of which spouse it is formally registered to and who actually ran the company. The presumption of joint ownership operates just as it does for a flat or a bank account, but applying it to a going concern works differently from applying it to ordinary property.
The key difference from dividing real estate is that a trading business cannot simply be split in half without putting its operations at risk: co-ownership of an operating company between former spouses almost always complicates decision-making and leads to conflict between the owners. For that reason, practice favours monetary compensation. We establish the market value of the interest through an independent valuation and secure a payment to the spouse who is not involved in management, so that the entrepreneur keeps control of the company and the other spouse receives a fair share of the real value of the business, not of the nominal value of the interest under the articles of association.
What the service includes:
Who it is for
The situations clients most often bring to us on this topic.
How we work
A fixed fee and a clear plan of action, agreed before work begins. The timeframes below are indicative and depend on the complexity of the case.
Inventory of the interest
We identify the business assets, the date and source of acquisition of the interest, and determine which part of the asset is subject to division. Timeframe: 3-7 days.
Business valuation
We instruct an independent valuer to determine the market value of the interest as part of a going concern, taking into account assets, revenue and business reputation. Timeframe: 2-4 weeks.
Negotiation or court
We pursue cash compensation without transferring the interest or actually splitting corporate control, or defend your position in court. Timeframe: by agreement, or 3-9 months in court.
Protecting the business
We structure the outcome so that the company’s operations do not stop while the dispute is under way or after it ends. Timeframe: 1-2 months.
What you will need at the start
We confirm the exact list for your situation at the consultation. This is a guide so that you arrive at the first meeting prepared.
Key figures
Experience in this practice area specifically, not in practice as a whole.
Common mistakes
Transferring the interest to a third party on paper. Ahead of a divorce, the entrepreneur spouse re-registers the interest in the name of a partner, a relative or a nominee, hoping to take the asset out of the division. Such transactions are regularly challenged as sham, and the very fact that an asset was moved out shortly before the divorce further weakens your position in court.
Relying on nominal rather than market value. Business owners assume that the division will use the nominal value of the interest recorded in the articles of association, not its real market price as part of a going, income-generating enterprise. The gap between the two figures is the main cause of protracted valuation disputes.
No shareholders’ agreement between partners. Co-owners work for years without a shareholders’ agreement that would determine in advance what happens to an interest when one of them divorces. Once a conflict has begun, agreeing rules for the future is far harder than fixing them in advance while relations between the partners are still smooth.
What you get
Retained control of day-to-day management. You continue to run the company without interference from your former spouse in corporate decisions.
An independent valuation of the market value of the interest. You hold the valuers’ opinion, which can be used both in negotiations and in court, unlike an arbitrary valuation at nominal value.
Protection against blocked corporate decisions. The work is structured so that a protracted dispute between spouses does not paralyse general meetings or the company’s ongoing business.
A legally binding compensation arrangement. The final outcome, whether an agreement or a court decision, fixes the amount and manner of payment of the compensation and closes off any later claims to the interest.
Related
Frequently asked questions
Is a business interest divided on divorce if it is registered to only one spouse?+
Yes, if the stake was acquired during the marriage with joint funds. Which spouse it is formally registered to, in the register or with the registrar, is not in itself decisive. What counts is when and with what funds the asset was acquired, not the entry in the documents.
Can an LLC stake simply be divided in half between spouses?+
Formally it can, but in practice this rarely serves the interests of either party: joint ownership of an operating company between former spouses almost always complicates decision-making. That is why cash compensation in exchange for giving up the stake is used more often.
How is a business valued on division: at the nominal value of the interest in the articles?+
No. The nominal value of a stake under the charter almost never reflects its real worth. For a division, an independent valuation is commissioned of the market value of the stake as part of a going concern, taking into account the company’s assets, revenue, debt burden and business reputation.
What happens to the business if the spouses cannot agree and the dispute drags on?+
A prolonged corporate conflict between spouses is dangerous for the company itself, from decisions being blocked at general meetings to the stake being used as a means of pressure on the business partner. That is why we try to steer such disputes towards a compensation arrangement as early as possible.
Is a company that one spouse set up before the marriage but that grew during the marriage taken into account?+
A stake acquired before the marriage generally remains personal property, but the increase in its value through joint investment or the work of both spouses during the marriage may be recognised as joint and become a ground for compensation.
How can a business be protected from division on divorce in advance?+
There are two main instruments: a prenuptial agreement, which sets the regime for the stake separately from the rest of the property, and a shareholders’ agreement between partners, which fixes in advance what happens to a participant’s stake if they divorce. Both can be concluded before the marriage or later, as long as there is no conflict in the relationship.