Boodle Hatfield has today published a comprehensive legal guide to help family businesses manage the fallout of divorce. Written by Partner, Katie O’Callaghan the book - A Legacy Intact: safeguarding your family business in the event of divorce, will be distributed and made available online today, as part of the firm’s series of 300-year anniversary initiatives.
Family businesses employ 14.2 million people in the UK and in the financial year ending 2020, the top 100 family businesses outpaced the turnover growth of the FTSE 100 by 12.9%. They are an integral element of the UK economy, but they face challenges other companies do not. When a shareholder’s marriage breaks down, family business’ financial and commercial wellbeing can be put at risk. Many owners are unaware of the full powers of the English Family Court when it comes to making financial orders on a divorce, and the associated jeopardy to the business. This practical new publication from Boodle Hatfield details the risks, and how to mitigate them.
This resource follows the firm’s Family Business report in 2021 – Family Business: The third pillar of the UK economy – and details the legal mechanisms that are available to family businesses to protect their assets and to seek to avoid them losing control in future. It covers pre- and post-nuptial agreements, using trusts and Family Investment Companies (‘FICs’) as vehicles for holding shares and corporate governance. These instruments can be employed to avoid the severe repercussions of divorce that in the worst case scenario can lead to the sale or transfer of shares, pensions and property. The guide also highlights risks family businesses can face around loss of privacy, with the possibility of media access to financial proceedings and the measures that companies can consider to limit this exposure.
This year, Boodle Hatfield is celebrating its 300-year anniversary and is marking the occasion with a number of initiatives that shine a spotlight on evolving aspects of law, life and society. O’Callaghan’s guide follows a recent event by the Family Law team, which saw a thought-provoking discussion on the limitations of law on marriage in the 21st Century.
Commenting on the publication, Katie O’Callaghan, Partner at Boodle Hatfield said: “At the core of the success of many family businesses are the close relationships of those involved. Sadly, when those relationships break down, more is at stake than a broken heart. In this scenario, divorce can destabilise even the best run operation, potentially threatening the livelihood of the family, as well as the future of the business. These enterprises are the backbone of our economy – but they need advice and support tailored to their unique structures. We have published our guide to provide practical information for any family business – whether just starting out, or building on the work of generations.”
Hayden Bailey, Private Client and Tax Partner at Boodle Hatfield, added: “Divorce or dissolution represent among the biggest threats facing UK family businesses. Katie’s guidance in A Legacy Intact is essential reading for family businesses looking to understand more about how to preserve their success for the long term. There are many measures family businesses can put in place – but they are rarely ‘once and done’ actions. These protections must evolve and change just as the family itself grows – if they are to provide the best possible protection for a future-focused family business.”