According to the Office of National Statistics in 2007 alone 128,534 people were divorced. People finding themselves in this unfortunate situation soon realise that in addition to the emotional turmoil it can also have an impact and serious financial implications for their business.

Finance is one of the key considerations in any separation settlement and if you own a business or have a financial investment in a business then you need to be aware that the value of the business, no matter how great or small may be taken into consideration when determining a settlement figure.

According to the BDO Private Company Index the sale of medium sized businesses fell for the fourth consecutive quarter in 2008 to reach its lowest level since 1988. As a result, the capital valuation of large private businesses has fallen by 21% in the space of a year and for small businesses the decline is greater, because of the greater risk.

On the one hand it may seem that if the value of the business has fallen then less money will be paid out in the settlement - but, you may find it difficult to raise funds using the business as collateral to meet other requirements of a financial settlement. Your partner will also be informed by their advisor that valuations are low and funds in short supply, which may lead to the separation proceedings being dragged out.

A frequent problem when extracting funds from a business is that other business partners or shareholders, whilst sympathetic to the situation, may object to funds being used to finance a colleague's divorce or to buy out a colleague's partner.

Possible solutions which do not involve an immediate cash outflow are the conversion of ordinary shares into loan stock or redeemable preference shares. Or, thinking more laterally, transferring shares into a Self Invested Pension Plan. Such a move requires careful planning and advice otherwise a hefty tax charge could arise. The shares owned by one party to the marriage would be transferred to the SIPP and the SIPP would be used as the vehicle to provide retirement benefits for both parties to the marriage and could be split so that a separate fund is safeguarded for the spouse receiving the financial settlement.

The Forensic Accounting team at Montpelier Chartered Accountants has extensive experience in business valuation, extracting funds in a tax efficient manner, helping both parties avoid tax pitfalls and advising on pensions and investments. In addition, they are 'financial coaches' to the Manchester pod of Resolution - the collaborative law group of family lawyers which seeks to arrive at a settlement without involving the courts.