How to Approach Separation When There is a Business Involved

20 April 2022
 Categories: , Blog


Divorce can be tricky at the best of times, but it may present even more problems where one or both parties are business owners. If you are in this position, what steps should you take in relation to the business if it now appears that divorce is inevitable?

Property Assessment

In Australian law, businesses may be treated as "property," no matter the type of business structure involved. This means that the business could be a sole trader, partnership or company but will nevertheless be treated as an asset and theoretically part of the property pool.

Independent Valuation

Clearly, every business is dynamic and does not have a static set value from one day to the next. This means that the business may need to be independently assessed so that the value owned by the party to the divorce is adequately set.

There are many different valuation methods, but it is crucial to appoint someone who really knows what they're doing. It's best to discuss this with a lawyer who has experience in both business and divorce proceedings.

Ongoing Concern

The business owner needs to continue running the operation as efficiently and effectively as before. Some people in this situation have been known to try and run down the business on purpose, as they think it might affect its value and benefit them during the divorce. If it can be proven, a court may take a dim view of this behaviour, and it's never the best approach to take. Also, this type of behaviour could alienate some of the company's important clients and affect any intangible value known as "goodwill."


The situation can become quite complicated when other parties are involved as company shareholders. If the two separating parties own the business together, it may be treated much like a partnership. However, if a third party is involved, the assessor will need to value the company's shares individually to know how many can be included as part of the property pool.

Business Partners

Sometimes, the two separating people are partners in a business, and much will then depend on how they want to proceed following the divorce. They may decide to continue as before, but in many cases, one will need to buy out the other, or they may decide to sell off the business in its entirety. Again, a strong valuation is important, and the final result may be open to negotiation.

Legal Advice

This situation can become very complex, and it's very important for all parties to get solid legal representation before they proceed.

For more information, contact a family law specialist.