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What does a business valuation in divorce achieve?


Published: 4th April 2011 - Category: Separation and Divorce - Author: Lynne Bastow

If there is a dispute as to the valuation of the family business it will be necessary to instruct a forensic accountant on a joint basis to value the business.

What will they produce?

  1. A fair valuation taking into account the company’s profitability, marketability, and the shareholding of the husband/wife. Not only will they assess the value of the business itself but also whether this should be discounted because of the unique skills of the business owner. Are there any restrictions on sale?
  2. Is the business simply an income stream? Such as an electrician working alone – sometimes these businesses are especially deceptive and people can have large value contracts with large organisations employing lots of subcontractors – so the one man band is not in fact a man with a van.
  3. What are the tax implications of sale?
  4. Does the business have sufficient capital or funding to buy out the husband/wife’s potential share?
  5. What was the value of the business when the couple first got together?
  6. The forensic accountant should be able to uncover any false assumptions made in the business accountant’s valuation if one has been supplied.

Such a report is especially important given a High Court case reported last week. The husband’s business was valued at £2 million prior to the parties relationship and the court decided to exclude £1 million because of this pre-acquired wealth.

Lynne Bastow - Divorce Solicitor

Meet Lynne Bastow

With over 20 years experience, Lynne can provide excellent and valuable advice and has a friendly, positive approach towards all her clients, ensuring you get the best service possible. If you would like my help you can contact me here. Contact Lynne

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The Little Book of Divorce

The Little Book of Divorce

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