Written by: Farzana Naz, Director / Head of Family
Reviewed by: Saracens Solicitors Family Law Team
This divorce checklist for business owners sets out the practical steps to take as early as possible if you run a company and are facing separation, since good preparation, particularly around documentation and disclosure, tends to lead to faster, less costly and less stressful proceedings. Acting early, ideally before formal proceedings begin, gives you the best opportunity to protect your business while working towards a fair overall settlement in a high net worth divorce case.
Working through this checklist with your solicitor at an early meeting helps ensure nothing important is overlooked before positions have had a chance to harden.
Key Takeaways
- Early preparation is one of the most effective ways to protect a business during divorce, with organised financial records, company documents and accurate disclosure helping to reduce delays, costs and unnecessary disputes.
- Business owners should avoid making significant commercial or financial changes without legal advice, as alterations to shareholdings, dividends, salaries or company structure can attract scrutiny and complicate settlement discussions.
- A coordinated team of specialist advisers can make a substantial difference, with family solicitors, accountants, valuation experts and tax advisers working together to protect the business while supporting a fair financial outcome.
Documents to Gather
Start by gathering three years of company accounts and tax returns, management accounts and management information for the current year, details of shareholdings, including any shareholder or partnership agreements, evidence of the business’s value from any recent transactions, funding rounds or prior valuations, and details of any loans, guarantees or borrowing connected to the business. Personal financial documents, including bank statements, pension valuations and details of other assets, should be gathered alongside this.
Having these documents organised before your first meeting with a solicitor allows advice to be tailored to your actual circumstances immediately, rather than being delayed while information is chased.
Protecting Commercial Interests
Review any shareholder agreements, articles of association or partnership agreements to understand what restrictions already exist on transferring or dealing with shares, since these provisions can be important in explaining to the court, and to your spouse, why the business cannot simply be split or sold. Consider whether any other shareholders, business partners or family members need to be kept informed, and take care not to make unilateral decisions about the business, such as changing its structure or ownership, without legal advice, since this can be viewed unfavourably later.
If you have not already done so, and are still able to, consider whether a shareholder agreement or company structure could be reviewed to provide clearer protection going forward, a topic connected to protecting business interests during divorce.
Financial Disclosure Requirements
English divorce proceedings require full and frank financial disclosure of both parties’ worldwide assets, including business interests, and this obligation applies regardless of how the business is structured or where it is based. Business owners should expect to disclose company accounts, management information, details of any dividends or drawings taken, and information about the business’s assets, liabilities and prospects, and should resist any temptation to delay or minimise disclosure, since this often backfires and increases both cost and suspicion.
Being proactive and transparent with disclosure, while still protecting genuinely commercially sensitive information through appropriate confidentiality safeguards, is generally the fastest route to a fair settlement.
Valuation Preparation
Before a formal valuation process begins, it helps to have a realistic sense of your business’s likely value, informed by industry benchmarks, recent transactions or previous valuations, so that your expectations are grounded rather than based on hope or worst case fear. Understanding how a forensic accountant is likely to approach the valuation, covered in detail in How Businesses Are Valued in Divorce Proceedings, helps you prepare relevant information in advance and reduces the likelihood of delays once the formal process begins.
It is also worth considering, with your solicitor, whether personal goodwill built around you individually might reduce the business’s value for divorce purposes compared with a business that would carry on unaffected by a change of ownership.
Immediate Practical Steps
In the immediate term, avoid making significant changes to the business, such as large new investments, changes to salary or dividend policy, or bringing in new shareholders, without first taking legal advice, since these steps can be misread as an attempt to reduce the business’s apparent value. Keep clear records of all business and personal finances going forward, seek advice before agreeing anything informally with your spouse about the business, and instruct a specialist family solicitor as early as possible.
For a wider view of pitfalls to avoid at this stage, our guide to Common Mistakes Wealthy Individuals Make During Divorce is a useful companion to this checklist.
Building Your Professional Team
Alongside your family solicitor, it is often worth involving your accountant early, since they already understand your business and can help prepare the financial information a forensic expert will need. Where tax consequences are significant, bringing in a tax adviser at this stage, rather than only once a settlement has been agreed, helps avoid costly surprises later.
A coordinated team, working from a shared understanding of your objectives, tends to produce a smoother, more efficient process than instructing different advisers separately as issues arise.
Finally, consider your own wellbeing alongside the practical steps in this checklist. Facing divorce while also running a business is genuinely demanding, and building in time to look after yourself, alongside seeking the right professional support, tends to lead to clearer decision making throughout what can be a lengthy process.
Frequently Asked Questions / Questions & Answers
What is the first thing I should do if I am a business owner facing divorce?
Gather your key financial and company documents and speak to a specialist family solicitor as early as possible, ideally before making any decisions about the business or agreeing anything informally with your spouse. Your solicitor can help you prepare for that conversation and decide what, if anything, should be shared and when.
Should I tell my business partners about my divorce?
This depends on your specific business and relationships, but it is generally sensible to take legal advice on what, if anything, needs to be communicated, particularly if other shareholders may be affected by the proceedings. Any planned change should ideally be discussed with your solicitor beforehand, even if you ultimately decide to proceed.
Can I keep paying myself a normal salary during divorce proceedings?
Generally yes, but any significant change to your usual salary, dividends or drawings, in either direction, should be discussed with your solicitor first, since sudden changes can attract scrutiny. Your accountant can often help prepare much of this information in advance, saving time once formal requests are made.
How far back do I need to provide company accounts?
Typically three years of accounts and tax returns are requested as a starting point, along with current year management information, though the exact scope depends on your case. Involving your solicitor and accountant together at this stage tends to produce a smoother process.
What if my spouse asks for information I consider commercially sensitive?
Full and frank disclosure is required, but confidentiality safeguards, such as restricting who sees certain documents, can often be agreed to protect genuinely sensitive commercial information while still meeting disclosure obligations. Agreeing these safeguards early, rather than after a dispute arises, tends to produce a smoother outcome for everyone involved.
Do I need to value my business before speaking to a solicitor?
No, a formal valuation is not needed before your first meeting, though gathering available financial information in advance helps your solicitor give more precise, tailored advice from the outset.
What if I run more than one business?
Each business will generally need to be considered and, where relevant, valued separately, since ownership structures, profitability and growth prospects often differ significantly between businesses, even where they are run by the same individual.
Use Our Divorce Checklist for Business Owners with Expert Support
If you are a business owner preparing for divorce, our family team can help you work through this checklist and build a clear strategy from the outset.
Call us on +44 (0)20 3588 3500, or visit our Family Law service page to find out more about how Saracens Solicitors can help.
Saracens Solicitors, Thanet House, 231 and 232 Strand, London, WC2R 1DA
