Court provides a helpful overview on some key principles when valuing businesses in financial remedy cases

BR v BR [2025] EWFC 88

Businesses in a financial remedy case can often prove to be a complicated and contested issue. Justice Peel has recently handed down a judgement that highlighted the applicable principles when considering the valuation and treatment of businesses in financial remedy proceedings.

Looking at the general facts to this case, this was very much a long marriage case with the parties being married for some 29 years. In this time, the Husband had built up a substantial technology business.

During the course of the financial remedy proceedings, the parties assets were valued at just over £263million. This was broken down essentially into £218million as the value of the business and net assets worth circa £45million.

It was the Husband’s proposal that he should retain the business and would buy out the Wife’s share. This would lead to a 62/38 division in favour of the Husband. The Wife’s case was that this is was a very long marriage and the families wealth had been built in this time. Accordingly, the Wife sought a 50/50 division of all of the assets. To achieve this, the Wife would retain some shares in the relevant business.

Peel J determined that the Husband should retain the business interests, and the total assets should be divided 55:45 in his favour to reflect the risky nature of the business interests. An interesting aspect to this case is that, Peel J considered the applicable principles when looking at the valuation and treatment of businesses in financial remedy proceedings.

As has been acknowledged in case law, there are inherent uncertainties in valuing a business. This is perhaps accentuated in a technology business. In deciding this case, the Judge adopted the valuation figures that were provided by the appointed single joint expert. The Judge considered guidance from Versteegh v Versteegh [2018] EWCA Civ 1050 and whilst an expert valuation may contain uncertainties, but this does not mean that it cannot be relied on, provided it is sufficiently accurate to achieve a fair outcome.

A further principle was that if a party wishes to adduce evidence from another expert, a shadow expert, they must comply with FPR 25 and look to make the required application as per Daniels v Walker [2000] EWCA Civ 508. Accordingly, in this case the Judge attached no weight to evidence produced by Wife’s shadow accountancy team, as such an application had not been made.

Peel J also considered a Wells sharing arrangement in respect of certain business interests, as proposed by the Wife. The Judge noted that the approach of Wells sharing should be avoided where possible (WM v HM [2017] EWFC 25). In this case, the Judge found that the Husband buying out Wife’s interests was preferable for several reasons such as the fact that a buyout produced a clean break, prevented ongoing commercial ties and personal conflict between the parties. Furthermore, if the Wife held shares and sold them on, as she may well wish to do, the Husband would lose his majority control of the business. This was a serious risk that could have wide ranging consequences.

A final principle considered is that when determining the appropriate figure for a buyout, there is a distinction between an accountancy discount applied by an expert when valuing a minority shareholding and a court discount when distributing the assets. Practitioners should be very mindful of this when advising their clients

This case is a really helpful reminder to family law practitioners on several issues that will arise when looking at businesses in financial remedy cases. It is important that we are all aware of these legal principles and take the correct approach when advising our clients on these potentially tricky points.

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