When acting for clients in cases which involve business interests’ parties often need to consider an appropriate mechanism by which to value those resources, review ownership and shareholding structures, assess liquidity and identify any tax consequences of a share disposal.

A business can and generally will be considered by the court as one of the financial resources available in a case to meet financial needs. In principle this can apply irrespective of whether the business is regarded as a matrimonial or non-matrimonial resource, although the court’s approach in each instance may differ.

How to value a business

If a valuation is required, the starting point in financial remedy proceedings is typically the instruction of a single joint expert (i.e. a forensic accountant) appointed by the court. If parties are not engaged in court proceedings, this does not debar them from appointing a forensic accountant voluntarily or engaging the services of an appropriate financial neutral to assist in their efforts to work towards settlement.

The company accounts 

Whatever the context and approach to dispute resolution, before instructing an expert there are certain steps that ought to be taken. This includes consideration of full business accounts for the last two financial years. If a business is incorporated, abbreviated accounts can often be accessed online via Companies House. These contain easily accessible information that either party can review digitally though are no replacement for full company accounts which are generally more informative and would typically include a full profit and loss account, balance sheet, detailed notes to the accounts and reports on behalf of the accountants and directors. The full accounts will provide more information about the performance of a business than publicly accessible abbreviated statements.

By their nature, financial accounts are inevitably historic recording the performance of the business in the past up to a defined point in time. If available, it may therefore be worthwhile to sense-check this information against up-to-date management accounts, which can help to provide both parties with more confidence in any valuation and may enable parties to make more informed decisions around settlement.

The role of a shadow expert 

In most cases after instructing a forensic accountant as a single joint expert parties will be able to reach a common ground. Where that is not possible, it is open to either to engage a “shadow expert” with a view to obtaining their own report. There are particular rules around this and it is important that the correct procedural steps are taken should a party wish to obtain, rely on or admit a shadow report into proceedings. Where a shadow is engaged in this capacity, there would typically need to be a meeting between experts to identify either whether any areas of agreement can be reached or which areas they remain apart upon.

In court proceedings it would then fundamentally be a matter for the Judge to determine any evidential issues in respect of value (at a final contest) or express an opinion upon this (in the context of a Financial Dispute Resolution hearing for example). If the value of assets in a business represents a particularly important issue in a case it could also be that this is determined as a discrete issue, whether within court proceedings or by arbitration for example. Your lawyer should be able to discuss the different avenues available to you to address this including appropriate forms of dispute resolution. 

A shadow expert can also be used to help sense-check and interrogate a single joint expert’s formal opinion, raise questions of their report or advise in the background.  

When should you seek expert evidence?

The court needs to be satisfied that it is necessary to instruct a single joint expert and each case will turn on its own facts in this regard. Where a court is so satisfied, it is common practice to instruct an independent accountant who has no prior knowledge of the business or parties in question, although it may be desirable for them to have sufficient knowledge of the market or sector in which the business operates and it can be preferable for them to have experience of the valuation of assets in matrimonial contexts.

Arguably, there is no mandatory requirement for the court’s permission to be obtained before an expert is formally instructed. However, permission is needed before expert evidence can be put before the court. In financial remedy proceedings it is generally good practice to approach the court to obtain permission pre-emptively. A failure to observe these formalities can result in additional dispute, unnecessary costs, duplication of work and delay.

If there is any dispute about whether to instruct an expert (and that is not uncommon), this should be addressed at the earliest stage possible in court proceedings and preferably no later than the First Directions Appointment. The court will need to weigh up the cost and delay of instructing an expert against the potential value of a party’s interest in the business and the relevance of this in the context of any other matrimonial assets which are available. In assessing this it is likely to have regard to the financial disclosure available to each party in their Form E, alongside the statutory criteria identified at section 25(2) Matrimonial Causes Act 1973; accessible here:


The scope of an expert’s instruction should be carefully considered with appropriate advice. Typically, a forensic accountant would be expected to express an opinion on the value of a spouse’s interest in a business, the extent to which this value is realisable (i.e. liquidity), the future maintainable income of the business and any tax consequences associated with a sale or disposition.

Key considerations 

The “value” of a business in the context of divorce should be treated with some caution and it may not be realistic to compare a business valuation to property or other matrimonial assets. This is essentially because property is often easier to value, easier to sell and easier to convert to cash. It is, in essence, more readily realisable. Business valuations may be more uncertain, particularly given recent world events such as Covid and Brexit. There may be greater potential for change in the valuation of business assets, they are typically regarded as more risk-laden and the sale of a business (or even part of a business) could affect a party’s earning capacity or future income, unlike for example the sale of a family home. There is a plethora of case law which addresses this including Wells v Wells [2002], P v P (Financial Relief; Illiquid Assets) [2004], Martin-Dye v Martin-Dye [2006], Versteegh v Versteegh [2018] and Martin v Martin [2018] amongst others.

Reading through the authorities, and with particular reference to Martin v Martin [2018] EWCA Civ 2866 the following general observations can be borne out:

1) Assets have different levels of risk. The court should take this into account when applying the sharing principle;

2) The quality (nature) of the asset is important. Liquidity and illiquidity could equally be relevant factors in their own right;

3) Valuations are often a matter of opinion on which experts differ;

4) Valuations fall into different categories. For some, such as residential properties, it would not be difficult for an expert to provide a secure valuation. For others, such as the valuation of a business, it would be difficult. Where the valuation of a private company falls within that spectrum would depend on the facts of each case;

5) Valuations of private companies could be fragile and ought to be treated with caution;

6) In valuing businesses, the broad choices are to (a) "fix" a value, (b) order the asset to be sold (where the market will determine its worth) or (c) divide the asset in specie;

7) Even where a court is able to fix a value this does not in itself mean that the value prescribed would necessarily have the same weight as the value of other assets in a case;

8) The court still has to assess the weight which could be placed on the fixed value;

9) This applies both to the amount and to the structure of the award to reflect a fair balance of risk and liquidity;

10) Judges have a broad discretion in how they approach this and inevitably therefore there is generally an element of litigation risk. 


Parties should bear in mind that the valuation of business assets might often feel like a subjective exercise and in many instances is more an art than a science. Appropriate guidance and early advice can make all the difference. It may also be misleading to treat a spouse’s interest in a business as a capital asset in isolation. Such interests should be measured against the other assets in a case and there ought to also be consideration of the income a spouse might be able to access from a business, alongside its “capital” value, which could be relevant to maintenance.

Invariably there is no one size fits all approach. If you are separating and either you or your spouse hold an interest in a business, it is important to take early advice tailored to your specific circumstances. At Freeths LLP we work closely with our in-house corporate and commercial colleagues to provide a joined-up, holistic service that connects these disparate areas. We also regularly engage the services of a carefully selected team of shadow experts and forensic advisers to ensure that all bases are covered in this respect.

If you would like to get in touch with Mark you can reach him at Mark.Heppinstall@freeths.co.uk or on 07824 621 130.