Divorce misery for firms

Business lobby group the Forum of Private Business (FPB) has warned SME owners that marital ruptures can have a negative effect on their businesses, following the high-profile divorce case of insurance multi-millionaire John Charman.

According to law firm Mace & Jones (an adviser to the FPB) cases like that of Charman, formerly number 263 in the Sunday Times rich list, may set an important precedent. Charman and his wife are in the midst of a settlement battle, contesting a fortune worth an estimated £160 million, which includes assets invested in a Bermuda-based trust fund.

Mace & Jones contest that such clashes increasingly pay out to estranged spouses and that it is often difficult to prevent all assets “including business capital and trust funds“ from being taken into account.

Currently, four out of ten marriages are destined to end in tears and around seven out of ten divorces occur between first-time couples. Without wishing to half-empty a glass or two at any upcoming wedding receptions, these statistics show that it is certainly worthwhile thinking about protective measures for your business.

‘The blunt truth’, says Ros Bever of Mace & Jones, ‘is that a spouse may have never even set foot in their partner’s business but if a marriage breaks down they could still claim against the firm’s assets or even force its sale.’

The result of such a clash can be dependant on factors like the length of the marriage, the presence of children or even the whim of a judge. Pre- or post-nuptial agreements are an obvious step to ensure that firms remain safe, whilst clearly detailed business roles, set out in contracts, will minimise potential arguments about contributions made.

Marc Barber

Marc Barber

Marc was editor of GrowthBusiness from 2006 to 2010. He specialised in writing about entrepreneurs, private equity and venture capital, mid-market M&A, small caps and high-growth businesses.

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