We value businesses and shareholdings for divorce, whether for negotiation, mediation or financial remedy proceedings, and act as Single Joint Experts where the parties or the court require it. Our role is to give an independent view of value, not to advocate for either spouse.
When is this valuation required?
- Either spouse owns a company, a shareholding, a partnership share or a sole trader business.
- The parties want an agreed figure to support negotiation or mediation.
- The court has directed expert evidence on the value of a business in financial remedy proceedings.
- A family business is held by several family members, one of whom is divorcing.
- A valuation has been produced and one party wants it reviewed.
Who instructs us?
- Family law solicitors, often jointly for both parties
- Spouses and their advisers
- Barristers and mediators, through the instructing solicitors
What exactly is valued?
The business interest held by the spouse: a whole owner-managed company, a minority or majority shareholding, a partnership or LLP interest, or a sole trade. Where the business holds property or investments, these are identified separately because they may be relevant to how value can be realised.
We also distinguish between trading businesses, whose value depends on future profits, and investment businesses, whose value is closer to their underlying assets.
How is value assessed?
Most owner-managed businesses are valued on their maintainable earnings: profits adjusted for one-off items, for the owner's actual remuneration and benefits compared with a market salary, and for personal costs run through the business. A multiple reflecting the business's risk and prospects is applied, and the result is adjusted for surplus cash, debt and other balance sheet items to reach the value of the shares.
Where the spouse holds a minority interest, or the business depends heavily on them personally, we consider the effect on value. Where facts are disputed, we show how value changes under each version rather than deciding the facts ourselves.
How the approaches are usually weighed
Typical
- IncomeMaintainable earnings at a multipleUsual starting point
- MarketComparable transactions and companiesCross-check
- AssetAdjusted net assetsWhere relevant
Value is not the same as available cash
A business may have a substantial value but little cash that could be taken out without damaging it, and selling shares in a private company may be slow, uncertain or impossible without the cooperation of other owners. Courts are well aware of this. We can comment on liquidity, the cash that could be extracted, and any tax that would arise on extraction, so the parties understand the difference between value on paper and resources that can actually be used.
The valuation does not decide the division
Our valuation establishes what the business is worth on the agreed basis and date. How the matrimonial assets are then divided is a matter for the parties, their lawyers and ultimately the court, applying principles of fairness that go well beyond the valuation figure.
Points we typically address
Depending on the instruction, matrimonial reports commonly cover:
- Valuation of owner-managed companies and shareholdings
- Minority interests and family-held businesses
- Maintainable earnings and owner remuneration and benefits
- Future profitability and the effect of the owner's involvement
- Business assets, liabilities and surplus cash
- The relevant valuation date
- Liquidity, saleability and cash available for extraction
What factors influence the result?
- Owner remuneration
- The difference between what the owner takes and a market salary for the role.
- Personal involvement
- How far the business's profits depend on the spouse.
- Valuation date
- Usually a recent date, with the court able to direct otherwise.
- Surplus assets
- Cash and property not needed for the trade.
- Other shareholders
- Family members or co-owners who limit the spouse's control.
- Liquidity
- Whether value could be realised, and at what tax cost.
What information is required?
- Accounts for recent years and up-to-date management accounts
- Details of the spouse's remuneration, dividends and benefits
- Articles of association and any shareholder agreements
- Director loan account balances
- Information on property and investments held by the business
- The letter of instruction and any court order
We send a tailored information request once the scope is agreed.
What report will you receive?
For proceedings, we prepare a report that complies with the Family Procedure Rules and associated practice directions on expert evidence, including the required statements of independence and truth. For negotiation, we can provide a more concise report. We answer written questions from either party where required.
See types of business valuation reports for how the scope of each type differs.
Timing and cost
How long will it take?
Court timetables set the deadline in proceedings. Most delay comes from the time needed to obtain information from the business, so it helps if the owning spouse's accountant is engaged early.
How much does it cost?
Where we are a Single Joint Expert, the fee is usually shared between the parties as directed. The quotation depends on the complexity of the business and the questions asked, and is confirmed before we accept the instruction.
How our fees are set →Frequently asked questions
How are businesses valued in divorce?
Usually on the basis of maintainable earnings and the business's assets, adjusted for the owner's remuneration and personal involvement, then converted to the value of the spouse's interest. The court may also need to know about liquidity and tax.
Do we each need our own valuer?
Often a Single Joint Expert is appointed instead, which reduces cost and duplication. The court decides whether expert evidence is needed and in what form.
What if my spouse controls the information?
We set out the information required and record what has and has not been provided. Disclosure issues are for the parties' solicitors and, if necessary, the court.
Will you say what my business is worth to me or to a buyer?
Normally we apply market value, reflecting a hypothetical buyer. We can also comment on value to the owner, liquidity and extraction where instructed.
Can you review a valuation prepared for the other side?
Yes. We can review another expert's report and explain where its assumptions or methods may be questioned, provided we are instructed in that capacity.
How much does a divorce business valuation cost?
It depends on the business and the questions asked. We provide a quotation before accepting the instruction, which helps the parties and the court consider proportionality.
