Evidencing Company Valuations in Divorce Cases
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Lisa Pepper
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The importance of evidencing calculations of company values
The financial remedies team at Osbornes Law represents clients where significant investment assets are in dispute.
Valuing company assets on divorce is often the most challenging issue in dispute. Expert evidence is necessary, and even then experts can produce very different valuations.
But if one party challenges the other side’s valuation, they must be able to produce evidence to support their arguments. If they fail to do so, they risk a significant lower distribution of assets as a recent high value case [DF v YB [2025] EWFC 46 (B)] illustrates.
What’s the background?
The parties (their identities are anonymised) had been in a 19 year relationship (including 6 years’ pre-marital cohabitation) before separation. The marriage produced twins, now 12. The wife was an EU national and the husband had joint citizenship in Britain and another country.
Despite little being in dispute and no complex issues involved, the proceedings had already cost the parties a total of almost £945,000 in legal costs. The disagreement concerned the net value of the husband’s company, a special purpose vehicle holding £250,000 worth of shares in another company; £250,000 of loan notes (plus £140,453 in interest), £14,281 worth of shares in a further company, and a £23,343 directors’ loan account (DLA).
A further issue related to how a loan of more than £394,00 made to the husband in 2019 should be treated for the purposes of a fair division.
The husband’s accountant proposed a valuation of £409,681 as at 30 September 2024, increasing it to £451,195 following the Autumn budget. The husband then put his final valuation, including the DLA owed by the company, at £460,257 (he argued that the company shares worth £14,281 should be excluded on the basis it should be subject to Wells-sharing).
However, the wife (who did not submit her own valuation evidence to challenge the husband’s) contended that his valuation was unreliable and/or misleading for several reasons. For instance, the DLA should be considered significantly higher than £23,343; and a CGT liability of £141,534 should not have been deducted when the valuation was calculated.
Instead, she proposed a total valuation of £640,453.
The judge rejected her argument. Her evidence was unsatisfactory and it was “impossible” for the judge to know what the accurate position was. In the absence of alternative evidence to counter the figures or methodology used by his accountant, the husband’s figures were adopted.
Court orders division of assets
The total net matrimonial assets were calculated at £14,199,256 and an equal division was ordered. The husband was required to pay a £510,000 lump sum to W within 28 days.
As for the 2019 loan, the judge decided both parties should share any future repayment made on a Wells-basis for the purposes of fairness.
What does this mean?
The decision illustrates the complexities involved in providing a reasonable valuation of corporate assets where several factors are at play. It also demonstrates the importance of producing at least satisfactory evidence to support a challenge to those calculations.
The full judgment can be found here.
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The team at Osbornes Law is highly experienced in successfully representing high net worth individuals in divorce and financial proceedings. Contact the leading divorce partner Lisa Pepper here, or get in touch by:
- Filling in our online enquiry form; or
- Calling us on 020 7485 8811
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