Of primary concern, quite naturally, for people going through a divorce is to find out what type of financial award they might ultimately receive. We at Blythe Liggins like to think that we are adept at providing clients with advice that may very well lead to a financial settlement being entered into. This advice can only be given once the extent of the matrimonial assets has been determined. In other words both sides disclose to one another what their capital assets amount to and what income they have.
One of the challenges in dealing with financial disclosure is to calculate the value of the parties’ business interests. There are many clients who trade either by themselves or in partnership or under the guise of a limited company. The challenge is to arrive at a valuation of the company so that in turn this can be factored into the type of fair and reasonable settlement that the parties very often aspire to, with the aim of avoiding court proceedings.
So what is a company worth? In the very best of times it can be challenging to ascertain the value of a company. There are many factors to be taken into account, for example very often a discount will need to be applied for a minority shareholder. In the alternative the company might have liabilities on the one hand or be overstocked on the other. Arriving at a valuation of a business interest has always been challenging but even more so nowadays due to the Covid-19 crisis which ironically in connection with some companies has enhanced their value, but in the case of a majority of businesses has caused their value to decline.
It is not a solicitor’s job to value a business interest, or shareholding but rather for a forensic accountant to undertake this task. However, what is important is to instruct the appropriate accountant with the necessary skill sets to value a business interest and at the same time for the solicitors instructing the accountant to provide them with the appropriate information which will form the bedrock of their valuation report.
There are many questions for the accountant to be answered, not least of all the capital value of a party’s interest in a business but also the liquidity of the business and whether or not there are any plans for re-capitalisation or ultimately perhaps even a sale. The matrimonial department at Blythe Liggins has worked with many businessmen and business women over the years, helping them to find solutions that not only protect their business interests and livelihood but also produce a fair and reasonable result for the parties when ultimately they divorce.
Legal advice on how a business might be dealt with when a marriage breaks down or a relationship fails can be sought by speaking to a member of the matrimonial department here at Blythe Liggins.
CAPTION: Andrew Brooks, Partner and Head of the Family Department