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Divorce court valuation of private business shares explained

Financial Times Companies •
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A divorce petitioner worries how a judge will price her share of a business. Family‑law partner Adele Pledger of Withers explains that courts demand a clear number, but the method hinges on the company’s structure. Shares in a private limited company lack a public market, making valuation inherently imprecise and opening the door to competing appraisals.

When valuations diverge, the judge may order an expert court‑ordered valuation, but it serves only as a broad guide, not a forensic audit. The expert will consider recent trading history and comparable transactions. Courts routinely apply discounts for illiquidity, minority holdings and volatility, reducing the headline figure. They also distinguish matrimonial from non‑matrimonial assets, meaning only wealth generated during the marriage is typically split equally.

If other assets can satisfy the spouse’s award, the court avoids forcing a sale that could cripple the business. Where funds are insufficient, a deferred sharing arrangement may be approved, allowing the company to be realised later and proceeds divided according to a predetermined percentage. Ultimately, presenting robust, well‑documented evidence determines how much of the enterprise ends up in the settlement.