Without a business owner's prenuptial agreement you live in the community of accrued gains (section 1363 German Civil Code). The company stays yours: no shareholding changes hands, nothing has to be sold. What is compared is only what each set of assets gained during the marriage. Whoever achieved the greater gain pays half the surplus in money (sections 1373 and 1378).

The value sits in plant, stock and shares; the claim arises in euros. The equalisation claim is capped at the value of the assets available when the property regime ends, after deducting liabilities (section 1378(2)). That protects you against a claim exceeding the substance. It does not protect you against a claim exceeding your liquidity.

Two cut-off dates, and one of them can be steered

For the initial assets the date of the marriage counts; for the final assets, the day the divorce petition is served on the other spouse (section 1384 German Civil Code). Weeks pass between filing and service, and in those weeks a company's value moves. Whoever files the petition has a hand in the timing. That is not a trick question but a question of preparation.

A shareholding inherited or transferred by parents is added to the initial assets. Only the increase in value after that remains subject to equalisation (section 1374(2)). And anyone who entered the marriage with debts may bring those into account, even beyond the amount of their assets at the time (section 1374(3)).

What the statute says about valuation, and what it does not

The statute says what date the value has to relate to (section 1376 German Civil Code). It does not prescribe a valuation method for businesses. Only for agricultural and forestry undertakings does it contain a separate rule based on earning value. For everything else the value is a question of evidence, decided through the parties' submissions and expert witnesses.

In practice that means: there is no such thing as the value of your company. There is a value per method, and the spread between two permissible methods is often greater than everything negotiated afterwards.

Net asset value. What exists is added up: machinery, vehicles, stock, receivables, less debts. For a consultancy with no fixed assets that is a value close to zero, even though the business earns good money every year.

Earning value. Future attainable earnings are capitalised. What matters: the sustainably attainable result and the capitalisation rate.

Industry multiples. Turnover or profit times a factor drawn from comparable transactions. Quick, but open to attack – usable as a plausibility check, rarely as the sole basis.

Liquidation value. What would remain on an orderly wind-up. It marks the floor, because a going-concern value below it makes no sense.

The framework: IDW S 13

In family law the IDW S 13 standard applies in addition, supplementing the general IDW S 1 standard with the particulars of family law. It follows two stages: first the objectified company value under the usual methods, then the transfer to the specific claim – this is where the entrepreneur's salary, latent tax and further corrections come in. For owner-managed businesses the earning value method is also modified: earnings tied to the person of the owner and not transferable are taken into account only to a limited extent.

The entrepreneur's salary as a corrective item

Where success depends on one person, a notional entrepreneur's salary is deducted – what an employed managing director would cost. Set high it pushes the value and the accrued gain down, set low it drives them up.

The same amount appears on the income side for maintenance. What has already been equalised in the accrued gains must not count again as income for maintenance – otherwise the same substance is paid for twice. For freelancers this is the most frequent arithmetical error.

Latent tax

Where a sale is assumed, the tax arising on it – not yet incurred and therefore latent – belongs with it. IDW S 13 expressly requires this to be considered for the equalisation of accrued gains and for the division of an estate, in the initial as well as in the final assets. Whether and in what amount depends on the legal form and the structure – that is for the tax adviser to calculate. Even so the item is regularly overlooked, although it can reduce the accrued gain considerably.

Further corrections at the second stage: discounts for contractual restrictions on disposal and the indexation of the initial assets to the price level of the final assets.

Each spouse can demand information about the other's initial and final assets and, on request, supporting documents (section 1379 German Civil Code). Information about the assets at the date of separation can also be demanded. Comparing that with the final assets shows what has disappeared from the assets between separation and service.

For a business owner that means specifically: annual accounts and profit statements covering several years, tax assessments, the articles of association including amendments, share transfers, drawings and capital accounts, pension commitments, business premises, loan agreements, shareholdings. Anyone who first assembles these documents during proceedings is negotiating about their own company using the other side's figures. A right to interfere in current business does not follow from the duty to provide information.

For an employee the last few payslips are enough; in your case there is a calculation. What is used is the profit over several years, frequently a three-year period, so that one strong year does not establish a permanently high need and one year of investment does not establish neediness. What counts is the profit available for drawings.

What the tax office accepts as an expense is not automatically deductible under maintenance law: depreciation, investment deductions, provisions and the private share of business expenses are assessed separately. Conversely, items are added that appear in no profit statement, such as the benefit of using a company car. For child maintenance there is a separate duty to provide information (section 1605 German Civil Code). The amount is based on the Duesseldorf Table.

The equalisation claim falls due, and it takes no interest in your working capital facility. Before the amount is discussed, therefore, what belongs on the table is what payment the business can absorb without endangering wages, orders or existing financing. That calculation only convinces in negotiations if it comes with figures.

On application the family court can defer the claim where immediate payment would come at the wrong moment and a postponement can reasonably be expected of the creditor (section 1382 German Civil Code). In rare cases performance can be refused where the equalisation would be grossly inequitable (section 1381). More reliable than either is an agreement fixing the instalments, the due dates, interest and security.

What you can agree about your shareholding is not governed by family law alone. The articles of association may contain consent requirements for transfers, restrict the transferability of shares, prohibit pledges or cap a settlement payment. Whether such a settlement clause caps the value for the purposes of the equalisation of accrued gains is discussed case by case.

I read those clauses because they define the room for manoeuvre in family law. Where matters move into company or tax law, I bring in the appropriate specialists, but I remain your point of contact. How matrimonial property law, the articles of association and succession interact is set out on the overview page for family law for business owners in Cologne.