Our website publishes news, press releases, opinion and advertorials on various financial organizations, products and services which are commissioned from various Companies, Organizations, PR agencies, Bloggers etc. These commissioned articles are commercial in nature. This is not to be considered as financial advice and should be considered only for information purposes. It does not reflect the views or opinion of our website and is not to be considered an endorsement or a recommendation. We cannot guarantee the accuracy or applicability of any information provided with respect to your individual or personal circumstances. Please seek Professional advice from a qualified professional before making any financial decisions. We link to various third-party websites, affiliate sales networks, and to our advertising partners websites. When you view or click on certain links available on our articles, our partners may compensate us for displaying the content to you or make a purchase or fill a form. This will not incur any additional charges to you. To make things simpler for you to identity or distinguish advertised or sponsored articles or links, you may consider all articles or links hosted on our site as a commercial article placement. We will not be responsible for any loss you may suffer as a result of any omission or inaccuracy on the website.
Entrepreneur calling on phone and working on line with a laptop sitting in a desk at home - business, technology, multitasking concept

Entrepreneurs should plan to divorce

 

 

Problems with personal relationships are now having a significant impact on the values of businesses and should be factored into the planning process for selling or passing on a business, a leading expert is warning.

During the past decade, the annual divorce rate has averaged around 107,000 in England and Wales and 10,000 in Scotland, but this year could reach 140,000 across the UK as the cost of living, wider economic challenges, and the impact of the Covid years bear heavily on relationships.

 

Murdoch MacLennan, Partner at UK Top 10 accountancy firm Azets, said: “The values of family businesses and SMEs will be seriously affected by the upward trend in divorces due to the close personal relationships that usually exists between directors or family members, immediate or extended, and key shareholders.

“The risk of relationship breakdown is often overlooked but must be factored into contingency planning, so the full value of a business can be protected. It is not just the sale price that needs protected – it is also jobs, values and business relationships.

“Divorce and fractured personal relationships can seriously damage business valuations, market appeal, and the sale value. Unfortunately, the whole of the UK will witness a significant number of divorces this coming year, many of which will involve entrepreneurs running family businesses and SMEs.

“The risk of further changes to taxes arising from the sale of a business will be encouraging owners to accelerate any sale. However, anyone thinking of marketing their business for sale should ensure that divorce and relationship risks are fully addressed and assessed. The risk is much reduced if it is out in the open.”

To help business owners and their advisors tackle relationship issues and valuations in a structured manner, Azets is focusing on addressing succession planning with business leaders, with a focus on:

  • How relationship breakdowns affect business and asset valuations
  • Common objectives, age gaps, personalities, and personal values
  • Founders’ children becoming involved and falling out
  • Investors running from failed relationships
  • Personal vendettas driving rushed sales.

 

Murdoch MacLennan added: “We are encouraging business owners looking to protect their business, workforce, and stakeholders to create a matrix of relationship risks so that divorce and conflict issues can be fully assessed.

“Relationship breakdowns cause wealth destruction and risk to the underlying business. The most effective approach is to engage a family business specialist who will facilitate a thorough review and ensure consensus on the objectives. The UK is set for a rising divorce rate but with open planning and communications the financial impact on business sustainability and or sale can be sensibly managed.”