When Marriages And Businesses Collide
Earlier this year a wife won the first round in a bitter divorce after 43 years of marriage, claiming that her “old-fashioned” husband wanted to favour their son over their daughters when it came to sharing out the family business interests. Susan Shield won her £50m case in the High Court after a judge ruled that her husband’s controlling shareholding in the family firm, by far his largest asset, must go into the pot for division between them in their divorce and called their son ‘opportunistic’ for supporting his father’s case against her.
Divorces are bad enough when the couple just own a family home but when there is a business involved, things can get very messy and even more acrimonious, as both spouses naturally want their ‘fair share’. If, as in this case, one partner believes that the split will adversely affect their children, then they should engage a firm of forensic accountants to ensure that the division really is equitable.
The first step towards agreeing a settlement is for both parties to make a full disclosure of their financial circumstances and all the family assets, including property, pensions and investments, as well as the business. Valuing the business is often the most difficult aspect of this, which is where the forensic accountants come into the picture, as the accounts of a business cannot by themselves give an accurate picture of its true worth.
This is because the values are historical and take no account of how the business is currently trading. Also, the breakdown of the marriage may have had a negative impact on the profitability of the business since the last accounts were prepared. Consequently, the forensic accountants must use their unique experience in this field to arrive at a fair valuation and will investigate all the information given to them to ensure that they have the true picture of the assets.
Author: Roger Isaacs, 24 March 2014
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