News broke late last week regarding the divorce of Superdry’s multimillionaire boss who has sold almost £50 million of shares in the company. It is speculated that the sale is to fund his divorce settlement. Divorce solicitor Zoë Bloom at Keystone Law takes a brief look at the importance of asset protection for high-net-worth business owners.
Julian Dunkerton has allegedly traded off four million SuperGroup shares, which equates to about five per cent of the company, at around £12 each to raise £48 million.
Mr Dunkerton founded the business in 1985 from a market stall in Cheltenham and remains the largest shareholder, holding a 27.2 per cent stake in the group which is worth around £292 million.
These sorts of dramatic changes in circumstances for families are common in today’s economic environment which relies more and more heavily on business owners and self-generated wealth. The questions surrounding the interaction between businesses owners and their family obligations are placed increasingly under the spotlight. While a couple might agree to share the spoils, is that the right decision for the business if it takes off? And what of those with whom the business enters commercial agreements?
Those seeking funding, entering into commercial arrangements and generally maintaining a show of strength in the market need to protect their business from the potential impact of a divorce or separation. The exposure can have a dramatic effect – not only due to the stress and distraction for the parties involved, but through the cost of the settlement – which can necessitate the forced sale of shares and lawyers prying into the workings of companies.
Protection is available and it is usually advisable for business clients to enter into nuptial agreements either pre-marriage or at any stage afterwards. Disclosing these agreements can be particularly helpful when trying to attract funding as they show a full commitment to the business. Typically, the agreement will ring-fence the business asset as far as possible or provide a settlement from other assets. Where that is not possible, the spouse’s interest will be defined so that any divorce is a quantifiable risk.
A nuptial agreement can help define the following:
- Whether the capital value of the business is to be shared in the event of separation.
- The source of funding and whether seed capital is to be shared in the event of separation.
- The extent to which the business will be exposed in the event of a separation of one of the business owners.
- The way the business will be valued in the event of separation of one of the owners.
- Who will value the business in the event of separation.
This article is for general information purposes only and does not constitute legal or professional advice. It should not be used as a substitute for legal advice relating to your particular circumstances. Please note that the law may have changed since the date of this article.