Home / The Rix & Kay Blog / How much is that doggie in the window?
Janet Raeburn

Partner - East Sussex (Uckfield)

23rd February 2015

A very good question you may ask, and one which is capable of a variety of answers. It might depend upon whether you love or hate dogs, have a particular attachment to a type of dog, or whether it has been your best friend for a number of years. It might depend upon whether it does indeed have that waggly tail!

In the context of matrimonial cases it is often a question of not how much that doggie is worth, but how much that company owned by my spouse (or that company in which he/she has shares) is worth. Indeed, this can be one of the most hotly contested areas when seeking to negotiate a financial settlement and one where invariably the client will need expert advice and guidance from an experienced family lawyer and often an appropriately instructed expert.

Often it is a case of ensuring that the right questions are asked and the basis of the valuation defined. Are you for example to ask for market value? or perhaps investment value? or indeed fair value? It is vital that your adviser understands the difference between these terms as each has a specific meaning. What you ask for can very much affect the value given. For example, fair value will take into account any special value which arises where an asset has attributes that make it more attractive to a particular buyer than to any other buyers in the market. That “doggie in the window” may be the perfect one to match with a dog already owned whereby together their value would exceed the value of the “doggie in the window” on its own.

Matters get further complicated when a party owns shares in a business but that shareholding is a minority shareholding, ie less than 50%. Does that mean that a “discount” on the value of the shares would have to be applied as particularly with smaller companies there may be issues as to who would in practice buy those shares if they were offered for sale on the open market and what control of the company that level of shareholding gives. Other issues include whether or not the company has cash reserves or sufficient liquidity to pay out to the other party representing their share of the value if that is deemed appropriate.

As one can see, valuing businesses is a tricky task. As a nation of dog lovers, we still have to make sure that one does not overpay for that “doggie in the window” or on the other hand undervalue your “best friend”.

For further information please contact Janet Raeburn, Partner in our Family team at our Uckfield office on 01825 744482 or email JanetRaeburn@rixandkay.co.uk.