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A recent Court of Appeal decision has once again highlighted the challenge of determining the correct approach to be taken with respect to the valuation and treatment of shares in a private company following a divorce.

 

In the reported decision of Martin v Martin [2018], the court was asked to reconsider, amongst other things, the level of risk which should be attributed to the husband’s ongoing interest in the family business set against the cash lump sum which he had been ordered to pay the wife.

 

The husband felt aggrieved that the wife was being provided with too much of the ‘copper-bottomed’ assets by her receiving what might be described as ‘hard cash’, and that not enough weight was given to the fact that he was retaining the business which carried its own uncertainties.

 

The court was also asked to reconsider the question of liquidity, namely whether the husband could reasonably extract the necessary funds by way of a dividend to pay off the wife within the allotted timeframe.

 

On this occasion, the appeal judge did not interfere with the size of the lump sum which the husband had been ordered to pay the wife, but did decide the fair way of resolving the matter was to substitute the lump sum which had been ordered to be paid by June 2019 with four annual payments to help spread the amount and make it easier.

Our specialist team of family lawyers have a great deal of experience at advising on all manner of complex issues which arise where business interests fall to be dealt with as part of a divorce.

 

As a full service law firm, we can also take a team-based approach which means that, should the need arise, your matter will have the benefit of our expert lawyers across departments. We are strongly placed to draw on the expertise of our company law team to help find a way through the commercial maze, as well as other experts in the field, such as accountants and company valuers, to provide you with robust advice and peace of mind.

 

To find out more, please do not hesitate to contact Rob Parker, Head of the Family Department on 01256 305530 or email rob.parker@lambbrooks.com

 

 

The contents of this article are for the purposes of general awareness only. They do not purport to constitute legal or professional advice.  The law may have changed since this article was published.   Readers should not act on the basis of the information included and should take appropriate professional advice upon their own particular circumstances.