1. Introduction: Why Your Partner’s Divorce Matters to You

When your business partner faces a divorce, it’s not just their private affair—your business could be drawn into the process. Divorce courts in England and Wales have wide powers to scrutinise and divide assets, and a business interest is often one of the most valuable assets in a marriage. If you’re not prepared, you could face disruption, forced sales, or even loss of control over the business you’ve worked hard to build. Acting early and understanding your exposure is essential to protect your interests and the future of your company.

2. Understanding Business Structures and Divorce Risk

The risk to your business depends heavily on its legal structure:

• Traditional partnership (Partnership Act 1890): Each partner owns a share of the business assets. If a partner divorces, their share may be valued and considered in the financial settlement, potentially forcing a sale or buyout.
  
  

• Limited Liability Partnership (LLP): Ownership and liability are divided according to the LLP agreement. The divorcing partner’s interest can still be valued and included in the divorce, but the LLP structure may offer some protection if the agreement restricts transfers.
  
  

• Private Limited Company (Ltd): Shares are personal assets. The court can order a transfer or sale of shares, but company articles and shareholders’ agreements may restrict who can own shares and how they are valued.
  
  

• Family businesses and informal arrangements: These can be especially vulnerable, as informal agreements are harder to enforce and family dynamics can complicate matters.

Understanding your business’s structure is the first step in assessing your risk and planning your response.

3. Is the Business a Matrimonial Asset?

The family court will consider whether the business (or your partner’s share in it) is a matrimonial asset. If the business was built or significantly grown during the marriage, it’s likely to be included in the “pot” for division. The court will look at when the business was started, who contributed, and how it fits into the family’s finances. Even if the business predates the marriage, any increase in value during the marriage may be up for sharing. The spouse is unlikely to get 50% of the whole business, but your partner’s share could be divided, and the court can order a transfer, sale, or payment to achieve fairness.

4. How Divorce Proceedings Can Affect the Business

During divorce, your partner must disclose their financial interests—including business assets. This means company accounts, partnership agreements, and even sensitive commercial information may be scrutinised by the court and the other spouse’s legal team. The business will be valued, often by an independent expert, and this valuation can be contested. The court may order a lump sum payment, transfer of shares, or even a sale of part of the business to meet the financial settlement. This can disrupt cash flow, management, and even the reputation of the business, especially if the process becomes contentious or public.

5. Can the Court Force a Sale or Transfer of Shares?

The family court has wide powers under the Matrimonial Causes Act 1973. It can order the transfer or sale of shares, or require a lump sum to be paid from business assets. However, partnership deeds and shareholders’ agreements may restrict transfers or require approval from other partners. These agreements are not always watertight—courts can override them if necessary to achieve fairness. Realistically, you could face a forced buyout, dilution of control, or even the sale of the business if there are no other assets to meet the settlement.

6. Confidentiality and Protecting Sensitive Business Information

Divorce proceedings can expose sensitive business information. While courts can order that certain documents are kept confidential or redacted, you should be prepared for some level of disclosure. Non-disclosure agreements (NDAs) and careful management of documents can help, but the court’s priority is fairness, not business secrecy. If you’re worried about trade secrets or commercial risk, raise these concerns early and ask the court for directions to limit unnecessary disclosure.

7. Common Pitfalls: What Business Owners Get Wrong

Many business owners underestimate the impact of a partner’s divorce. Common mistakes include failing to update partnership or shareholder agreements, mixing personal and business finances, and ignoring early warning signs. Some assume informal arrangements will protect them, but courts can look past these if fairness demands. Not communicating with other partners or shareholders can lead to confusion and conflict, especially if a forced sale or buyout is ordered. Legal proceedings can be lengthy and expensive, so early action is vital.

8. Top Tips for Protecting Your Business

• Review and update all partnership and shareholder agreements regularly.

• Keep business and personal finances strictly separate to avoid confusion in court.

• Consider pre-nuptial or post-nuptial agreements for all partners, especially in family businesses.

• Get a professional business valuation early, so you’re prepared if the issue arises.

• Maintain open communication with all stakeholders—other partners, shareholders, and key staff—to manage risk and expectations.
  
  

9. Frequently Asked Questions

Can my partner’s spouse really get 50% of my share?
No, but the court can order a transfer or sale of your partner’s share to meet a financial settlement.

What if the business is my only source of income?
The court will consider this, but may still order a sale or transfer if there are no other assets.

How long does the process take?
Divorce proceedings involving business assets can take many months, especially if valuations are disputed.

What if we disagree about the value of the business?
The court may appoint an independent expert, but both sides can challenge the valuation.

10. Conclusion: Planning for the Worst, Protecting the Best

Proactive planning is your strongest defence against the fallout from a partner’s divorce. By understanding your business structure, keeping agreements up to date, and separating business from personal finances, you can reduce risk and disruption. Open communication and early action help protect not just your interests, but the stability of the business as a whole. Don’t wait for a crisis—review your arrangements now and encourage your partners to do the same.

Disclaimer:
This article is for general information only and does not constitute legal, financial, or tax advice. For advice specific to your circumstances, consult a qualified professional.

If you need more detail, our 7 Steps to File for Divorce in England and Wales UK may help.

You might also find Divorce business valuation - UK useful.

For related issues, see Family Business Governance: Structuring Succession and Wealth Transfer.