Mediation is a widely-used, successful technique for resolving disputes

Mediation can be especially helpful when a business is involved

Provides a ‘space’ in which a business and its value/liquidity can be explored with the help of the mediator and an independent accountant

Will talk about the business-related concerns of the business owner, and the non-business owner, in later videos but an important aspect of mediation is that it allows loss of trust, and mutual suspicion, to be overcome

Also tackles the unequal information available to spouses where a business is involved

It works!

Big advantages are the greater speed and lower costs than going to court

Produces outcomes that can be made binding and enforceable

Private process

Above all it avoids the confrontation and unpleasant aspects of going to court

Likely to achieve ‘buy-in from both spouses

0:34 - 1:20 - Their knowledge of the business and its prospects may be incomplete, sometimes minimal

1:21 - 1:45 - Lack of information engenders suspicion and lack of trust

1:46 - 2:19 - May have little or no experience of accounts and accounting, of interpreting financial information, or of business valuation. So, even given more business information it may be difficult to understand and use

2:20 - 3:19 - May suspect the other spouse/CP is capable of manipulating the accounts, or of ‘creative accounting’, with a view to claiming the business to be less successful and less valuable than it really is

3:20 - 7:14 - May suspect that the business does not receive all of the income to which it is entitled

7:15 - 8:09 - Likely to regard the business owner as having a network of sympathetic business contacts that the non-business owner lacks

8:20 - 9:19 - Business and financial information can be presented and interpreted objectively by an independent accountant
The non-business owner can ask basic questions and expect straightforward answers
The non-business owner can also find out the reality of the business and its prospects, whether good, bad or indifferent. Sometimes the prospects today really are not as rosy as they have seemed in the past

9:20 - 9:59 - Difficult concepts such as ‘valuation’ and ‘liquidity’ can be explained in everyday terms

10:00 - 10:44 - The couple can get to grips with balancing their own money needs, with the need for the business to survive and prosper

10:45 - 11:09 - Final points? The business owners' concerns and perspectives are quite different

0:25 - 1:04 - Their concerns are mostly concerned with the wellbeing, perhaps survival, of their business

1.05 - 1:44 - A sense of entitlement and belief that the business should not be taken into account where the former partner has played no part in it

1:45 - 2:04 - They may question whether the business has any value at all if the owner(s) regard themselves as ‘being the business’, or believe it is incapable of sale because of their longstanding involvement

2:05 - 2:49 - Businesses are not run to fund divorce settlements

2:50 - 3:34 - Settlement is likely to require the withdrawal of substantial funds, and possibly additional bank borrowing. The tax implications are likely to be a worry and seen as a further source of cash loss

3:35 - 3:54 - In the background are ‘interested’ groups who may be anxious about the owner’s divorce – employees, investors, the bank, the landlord, and key customers.

3:55 - 4:29 - For a shareholder in an SME there is likely to be the unwelcome and possibly embarrassing need to discuss the position with other shareholders, and involve them in the outcome

4:30 - 5:59 - Let’s not forget shareholders and, of course, minority shareholders

6:00 - 6:50 - Allows the business owner to explain their concerns and priorities frankly in the presence of the mediator and an independent accountant, if one is used. It is solution focused. Gives the parties the opportunity to understand how much the business can fund sustainably, as well as the related risks and uncertainties

6:51 - 7:29 - Gives the mediator the opportunity to explore the limitations of each spouse’s claims and assertions

7:30 - 8:39 - Gives the business owner assurance that the business will continue in the future and that funding the divorce could be seen as ‘just another business challenge’. Allows the ‘ways and means’ issues to be considered – what about tax? Is there a need for more business borrowing, how can the withdrawal of funding the divorce best be managed over time, how to deal with directors’ loans etc?

8:40 - 10:11 - Acknowledgement of concerns are so important alongside a recognition that there are real issues to resolve

0:35 - 0:49 - Value the business or the shareholding

0:50 - 1:02 - Comment on the financial health of the business, and on issues such as the reliability of its accounts and the risks that the business faces

1:03 - 1:17 - Comment on how much liquidity can be withdrawn sustainably and over what period

1:18 - 1:59 - Provide input on the tax implications of the proposed settlement

2:10 - 2:54 - Put simply, the independent accountant will assist the parties and the mediator by providing objective and impartial financial information and analysis – in effect a reality check!

2:55 - 3:19 - The accountant is neutral, does not take sides, perhaps on both sides

3:20 - 3:59 - Likely to be chosen for their ability to explain business finance straightforwardly, in everyday terms

4:00 - 4:54 - Often his or her views are set out by the accountant in a formal document before the mediation, which then stands as an independent source of information for use and discussion during the mediation

4:55 - 6:29 - In the unlikely event that the mediation is unsuccessful the same document may be used in a subsequent settlement process saving time and cost