If you’ve built a business from scratch, the impact that divorce may have on its finances, ownership and commercial operation, is enough to keep you up at night. For the growing number of young founders and entrepreneurs in London and beyond, this isn’t a far-off hypothetical.

Marriages do break down, and when they do, your company can end up in the spotlight as part of the financial settlement. Let’s take a closer look at what actually happens and how you can protect what you’ve built.

How Courts Treat a Business in Divorce

The first thing to know is that a family court won’t ignore your business. Whether you run a limited company, a partnership, or work freelance as a sole trader, the value of the business is likely to be treated as a matrimonial asset if it grew during the marriage.

Courts in England and Wales are concerned with the principle of fairness. The starting point is to consider an equal split of the matrimonial assets and to consider whether this would achieve a fair outcome. If 50/50 does not achieve fairness, the court can depart from this, particularly if it’s necessary to meet financial needs. In respect of a business, the court will specifically consider when it was started, how much it grew during the marriage, and whether your spouse played any role in it.

A company you launched five years before the wedding may not be treated the same as one you co-founded with your partner a year into the marriage. Since the Supreme Court’s ruling in Standish v Standish [2025] UKSC 26, the source of an asset, not simply who holds the title, will be a relevant factor in determining whether it falls inside the matrimonial pot. That distinction is one of the main reasons proper legal advice early on will make a real difference.

What Happens During a Business Valuation

If your business forms part of the finances to be considered, the court will want to know what it’s worth. In most cases, both parties will jointly instruct a Single Joint Expert (usually a forensic accountant) under Part 25 of the Family Procedure Rules 2010. Their duty is to the court, not to either spouse.

They’ll look at turnover, profit, assets, liabilities, goodwill, and future earning potential. For a small and simple limited company dealing in a mainstream market, the report can be relatively simple. Matters can become complicated for various reasons, including when a business owns assets overseas, or provides a niche service or product or has multiple revenue streams.

Keep in mind that the court, not the expert, ultimately decides the value. In higher-value cases, it’s also common for one or both sides to instruct a shadow expert to review the SJE’s methodology.

One thing that catches founders off guard is that personal goodwill, meaning the value tied to your skills and reputation, can still be factored in, though courts will often apply a discount if the business depends on you. Other valuation discounts can be applied to reflect liquidity and potential lack of marketability of the business.

Can Your Spouse Claim a Share?

In short, yes, they can, but the extent of this claim requires careful consideration and specialist legal advice based on the specific facts including when the business was established and how it has been treated during the marriage.

A spouse doesn’t need to have worked in the business or be a shareholder to make a claim on the marital element of its value. If the entire business was built during the marriage, the court will treat it as a shared asset.

Pre-Marital Assets Aren’t Always Off-Limits

The starting point with any pre-marital asset valuation is that it’s considered non-matrimonial although this could change, especially after a long marriage and through the conduct of the parties.

In any event, the pre-marital value will always be treated as a resource, which is particularly relevant when considering needs. This means that even non-matrimonial assets can still be used to meet your or your spouse’s reasonable needs. So if the business is the only significant asset, the fact it’s non-matrimonial in nature won’t necessarily keep it off the table.

Courts don’t usually force the sale of a going concern. More commonly, the business-owning spouse will keep the company and offset the other party’s interest with other assets, like a larger portion of the family home or pension.

Because business valuations, matrimonialisation arguments, and offsetting all hinge on technical detail, the quality of your legal team will shape the outcome. A top divorce lawyer with real experience in high net worth divorce and complex financial settlements is essential in these cases. The way a business is valued and divided usually depends heavily on the quality of legal representation on both sides.

Pre-Nups, Post-Nups, and Shareholder Agreements

If you haven’t married yet, or even if you have, there are tools that’ll help ring-fence your business interests. A pre-nuptial agreement that clearly identifies your business as a non-matrimonial asset won’t be automatically binding in England and Wales. However, following Radmacher v Granatino, courts will give it significant weight if it was entered into freely and with full financial disclosure. Post-nuptial agreements work in a similar way and can be drawn up after the wedding.

If you have business partners, a shareholder agreement with clear provisions for divorce scenarios will help stop your personal situation from destabilising the company.

What to Do Before and During Proceedings

It’s never too early to obtain legal advice. Even before the divorce proceedings have started, you should consider the following:

  • Keeping personal and business finances separate
  • Maintaining clean, up-to-date company accounts
  • Obtaining a realistic, independent valuation of your business
  • Be mindful that financial disclosure usually requires you to exchange information relating to dividends and salary paid within the last couple of years.
  • It’s essential to disclose everything honestly. Hiding assets will backfire badly in court

During proceedings, resist the urge to strip value from the company or restructure ownership. Courts take a very dim view of this, and it’ll damage your credibility.

Protect the Business the Way You’d Protect Any Other Asset

Divorce is stressful enough without watching something you’ve spent years building get pulled apart in a courtroom. The good news is that with proper planning, expert input, transparent disclosure, and the right legal team, most business owners will reach a fair settlement without losing control of their company.

The earlier you act, the more options you’ll have. And if there’s one takeaway here, it’s this: good record-keeping and early legal advice aren’t optional extras, they’re your strategic best friend.