What happens to a family business in a divorce? How one couple divided a £340,000 company without selling it

When a couple who own a business together divorce, the instinctive assumption is that the business will have to be sold and the proceeds split. That is usually the worst available outcome, and it is rarely what happens.

A trading company is not a bank account. Its value on paper depends on someone continuing to run it. Sell it under pressure and the value falls, the income that pays maintenance disappears, and any employees go with it. Courts understand this. The leading authority on the point, Wells v Wells [2002] EWCA Civ 476, established the approach now known as Wells sharing: where assets are illiquid and carry risk, the answer may be to share the risk between the parties rather than force a sale to create cash.

This article explains how a business is valued on divorce, who does the valuing, what the realistic options are, and then follows one anonymised case in which a company worth £340,000 was divided without a contested hearing and without the business stopping trading.

A gap worth stating first

There is no published figure for how often a trading business forms part of a financial settlement on divorce in England and Wales.

Family Court Statistics Quarterly records volumes of financial remedy applications and disposals. The bulletin for January to March 2026, published on 25 June 2026, recorded 12,646 applications and 12,764 disposals. It contains no breakdown by asset type. Neither the Office for National Statistics nor the Ministry of Justice publishes a count of business-owning divorces.

So any article stating a percentage for how many divorces involve a business is using a figure that does not exist in official statistics. The honest position is that nobody knows.

Is the business part of the marriage?

Before value is argued about, there is a prior question: is the business matrimonial property to be shared, or is some or all of it outside the sharing principle?

The current leading authority is Standish v Standish [2025] UKSC 26, decided by the Supreme Court on 2 July 2025. It concerns the concept of matrimonialisation, which is the process by which an asset that began as one party's separate property can become shared property through how the couple treated it during the marriage. The Supreme Court confirmed that the sharing principle applies to matrimonial property, and found that a substantial proportion of the assets in that case were non-matrimonial.

For business owners the practical relevance is this. A company built entirely during the marriage by one or both spouses is ordinarily matrimonial property. A company inherited, or established long before the marriage, may be treated differently, though growth during the marriage and the way the couple used the business can change that analysis.

Alongside that sits section 25 of the Matrimonial Causes Act 1973, which lists the factors a court must consider, and the principle from White v White [2000] that the contributions of a homemaker and a breadwinner are not to be discriminated between.

How a business is valued

There are three recognised approaches, and which one applies depends on what sort of business it is.

The three approaches to valuing a business, and when each applies
Approach	What it measures	Best suited to
Asset based	What the business owns, less what it owes	Asset-heavy businesses, property holding companies, businesses being wound down
Earnings based	Sustainable profit, multiplied by a figure reflecting risk and sector	Established trading companies with a record of profit
Market based	What a buyer would actually pay, by reference to comparable sales	Businesses in sectors where comparable transactions exist

The structure changes the question

What needs valuing, and what evidences it, differs by legal structure.

What to disclose and how value is established, by business structure
Structure	Documents needed	How value is established	Commonly missed
Limited company shares	Companies House records and the latest filed accounts	Valuation of the shareholding	Confusing the company's trading value with the shareholder's personal asset value
Sole trader	Last two tax returns and business bank statements	Net trading value, being assets less liabilities	Assuming a sole trader business has no value at all
Partnership	Partnership accounts and the partnership deed	Net value of that person's share	Failing to disclose the capital account balance
Director's loan account	Company accounts showing the balance owed	The outstanding balance	Missed completely, and frequently a substantial sum

The director's loan account is the single most commonly overlooked asset in a business owner's divorce. Where a director has lent money into the company, that balance is an asset owed back to them. Where the company has lent to the director, it is a liability.

Why paper value is not cash

A valuation produces a number. That number is not money sitting anywhere.

Business value is uncertain, illiquid and carries risk. Cash and property do not. This is why business value is rarely swapped pound for pound against other assets in a settlement. A spouse taking £170,000 of house equity is taking something realisable and reasonably certain. A spouse retaining £170,000 of company value is retaining something that depends on trading conditions, on their own continued work, and on tax when extracted.

The discount applied to reflect that difference is a matter of judgement rather than formula, and it is one of the main things the parties are negotiating.

Who does the valuing

Where the value is disputed or significant, an accountant or forensic accountant produces a valuation.

The important structural choice is whether that expert is instructed by one side or by both. A single joint expert is instructed jointly, works to an agreed set of questions, produces one report both parties receive, and does not advocate for either of them. Part 25 of the Family Procedure Rules governs expert evidence in family proceedings and the courts strongly favour a single joint expert where one will do.

The practical advantages are cost, speed and the absence of two experts arguing about each other's assumptions.

Professional valuation work is not cheap. Published ranges commonly run from a few thousand pounds for a straightforward small company to considerably more for a complex or contested valuation.

The realistic options

Once there is a value, there are four broad routes.

One spouse keeps the business, the other is compensated elsewhere. The most common outcome. The company stays intact and the other spouse takes a larger share of the house, pensions or savings.
One spouse keeps the business and buys the other out over time. Used where there are insufficient other assets to balance. Payments are staged so the company can fund them from trading.
Both continue to hold shares. Rarely advisable between former spouses, and it keeps the two of them financially entangled.
Sale. The last resort. A sale usually destroys value and removes the income stream that maintenance depends on.

Why a forced sale is a last resort even in court

Wells v Wells established that where assets are illiquid and risk-bearing, sharing the risk can be fairer than converting them to cash at a discount. Forcing a sale crystallises tax, attracts a distressed-sale discount, and ends the income both parties may be relying on.

A real case: a £340,000 company, two shareholders

The case below is published by Mediate UK, a Family Mediation Council registered provider, among its anonymised case studies. The provider states: "All names and identifying details have been changed to protect client confidentiality. The disputes, the process followed, the number of sessions and the fees paid are all genuine."

It is a genuine anonymised case, not a composite.

The starting position

A couple referred to as Ray and Nadia owned a limited company between them, Ray holding 60 per cent of the shares and Nadia 40 per cent. They also owned a family home.

The sector, the turnover and the profit are not published and are not reproduced here.

The valuation

Rather than each instructing their own accountant, they jointly instructed a single joint expert to value the business. The report cost £3,000, split equally between them, and took seven weeks.

The company was valued at £340,000 net.

The problem the valuation created

Nadia's 40 per cent shareholding represented a substantial sum on paper. It was not money she could access, and the company could not pay it out without damage.

Paying her out in one sum would have drained the working capital the business needed to trade. Selling the company would have realised cash but ended the enterprise and the income. Leaving both of them as shareholders would have tied two separating people together indefinitely.

What was agreed

Three elements, working together:

Nadia transferred her shares to Ray, so the company came under single ownership and continued trading.
Nadia received a larger share of the equity in the family home, converting part of her business interest into a realisable asset immediately.
The balance was paid to her by the company in staged payments over three years, secured by a charge.

The charge is the part that makes this work. Staged payments over three years leave the person who is leaving exposed: if the business fails or the paying party defaults, the money never arrives. A charge gives that person security over an asset, so the promise is backed by something. Without it, a staged buy-out is an unsecured promise from a company the recipient no longer has any control over.

The reconciliation

Ray and Nadia: how each element of the settlement was dealt with
Asset	Position	Issue	Resolution
Limited company	£340,000 net; Ray 60 per cent, Nadia 40 per cent	Value is illiquid and depends on Ray continuing to run it	Nadia transfers her shares to Ray
Nadia's business interest	Her 40 per cent shareholding	Paying it in one sum would drain working capital	Part converted into house equity, balance paid in stages over three years
Family home	Jointly owned	Needed to balance the share transfer	Nadia takes a larger share of the equity
Security	None initially	Staged payments carry default risk	Payments secured by a charge
Valuation	No agreed figure at the outset	Competing valuations would be slow and adversarial	Single joint expert, £3,000 shared, seven weeks
Legal effect	Agreement not enforceable on its own	Needed to be made binding	Consent order drafted and sealed by the court

What it cost and how long it took

Ray and Nadia: published costs and timings
Item	Amount or duration
Mediation	£835 per person
Consent order drafting	£600 per person
Total per person	£1,435, being £2,870 for the couple
Single joint expert valuation	£3,000, split equally, outside the mediation fee
Joint mediation sessions	Four, following one assessment meeting each
Time waiting for the valuation	Seven weeks
Total elapsed time	Five months

For comparison, MoneyHelper puts contested financial proceedings at £30,000 plus VAT or more each. The company in this case was valued at £340,000, so the entire cost of resolving it, including the expert, came to roughly 1.7 per cent of the value of the asset in dispute.

Making it binding

None of the above has legal effect until a court order says so.

The agreed terms were drafted into a financial consent order, filed with Form A and Form D81, and approved by a district judge on the papers. Under section 33A of the Matrimonial Causes Act 1973 the court may make the order in the terms agreed "unless it has reason to think that there are other circumstances into which it ought to inquire".

Where a settlement includes staged payments and security, the drafting matters more than usual. The order has to specify the amounts, the dates, what happens on default, and the nature and priority of the charge. A loosely drafted staged payment provision is difficult to enforce years later.

Under the court fees in force from 13 July 2026, an application for a financial order by consent costs £62, against £321 for a contested application.

Common mistakes

Treating the valuation as cash. A £340,000 company does not have £340,000 available.
Each instructing their own expert. Two reports cost more, take longer and usually disagree.
Forgetting the director's loan account. Frequently significant and frequently missed.
Agreeing staged payments without security. An unsecured promise from a company you no longer own is worth what the company is worth when the payment falls due.
Assuming a sole trader business has no value. It may have no sale value, but it has assets, and the income matters for maintenance.
Ignoring tax. Extracting value from a company has tax consequences that change the real figure.
Assuming the business must be sold. It is the least common and usually the worst outcome.

What this case does not show

The sector and trading figures are not published, so the valuation cannot be checked or generalised.
The house value is not published, so the balance between the equity uplift and the staged payments cannot be calculated.
It is one case from one provider, and demonstrates that the route works, not how often it is used.
It was a case where both parties engaged. Mediation is voluntary. Where one party will not disclose or will not participate, court proceedings may be the only route.

The short answers

What happens to a business in a divorce? It is valued and treated as an asset in the settlement. In most cases one spouse keeps it and the other is compensated from other assets or through payments over time.
Will I have to sell my business? Usually not. A forced sale is a last resort, because it destroys value and removes the income the settlement may depend on. Wells v Wells [2002] EWCA Civ 476 established that illiquid, risk-bearing assets may be shared rather than sold.
Can mediation deal with a family business? Yes. In one anonymised Mediate UK case a limited company valued at £340,000 net was divided through four joint mediation sessions without a contested hearing.
How is a company valued on divorce? By an asset based, earnings based or market based approach, depending on the business, normally by an accountant or forensic accountant.
What is a single joint expert? One expert instructed by both parties together, working to agreed questions and producing one report for both, rather than each side instructing its own.
What does a business valuation cost? In the case above, £3,000, split equally, taking seven weeks. Published ranges for professional valuations vary widely with complexity.
Do I have to buy my spouse out in one payment? No. Staged payments over a defined period are a recognised solution, and should be secured, for example by a charge.
Is a business built before the marriage still shared? Not necessarily. Standish v Standish [2025] UKSC 26 confirmed that the sharing principle applies to matrimonial property, and that assets may remain non-matrimonial depending on how they were treated during the marriage.
How many UK divorces involve a business? There is no published figure. Family Court Statistics Quarterly records financial remedy volumes but no breakdown by asset type.

Sources

Wells v Wells [2002] EWCA Civ 476
Standish v Standish [2025] UKSC 26, judgment 2 July 2025
White v White [2000] UKHL 54
Matrimonial Causes Act 1973, sections 25 and 33A
Family Procedure Rules 2010, Part 25 and rule 9.26
Institute of Chartered Accountants in England and Wales, guidance on business valuations for forensic accountants
Ministry of Justice, Family Court Statistics Quarterly, January to March 2026, published 25 June 2026
GOV.UK, EX50A civil and family court fees, effective 13 July 2026, and Companies House filed accounts
MoneyHelper, guidance on the cost of divorce and financial proceedings
Mediate UK, published anonymised case studies, September 2026