FW v FH

In a financial remedy case involving a private company, the court may value the business on the balance of probabilities, but it is not required to pursue mathematical or accounting precision where the valuation is inherently uncertain. Private-company valuations are particularly fragile and must be used to test the fairness of the proposed outcome.

Where a proposed immediate sale would cause substantial value loss through minority or lack-of-control discounts, and liquidity is not available, the court may defer payment and order a fixed lump sum at a later date. The award should fairly reflect the parties’ respective interests in future business performance and should not leave one party sharing downside while being excluded from upside.

The applicant wife sought financial remedy orders following the breakdown of the parties’ marriage. The principal dispute concerned the husband’s interest in a group of private businesses, which formed the substantial majority of the matrimonial assets.

The wife sought an immediate sale of the husband’s shares or, alternatively, a lump sum payable in tranches. The husband proposed that she should receive a share of whatever he ultimately realised, subject to a cap and delayed payment. The court had to determine the value of the business, whether a terminal value should be included, whether an immediate sale was appropriate, and how the resulting award should be structured.

1. Outcome. The court ordered the husband to pay the wife £8,948,930, representing one half of the net business assets calculated by reference to a 40 per cent shareholding, payable by 1 August 2023, subject to pro rata adjustment if his shareholding was reduced. It also ordered interim equalisation payments, transfer of the parties’ properties, periodical payments, child maintenance and school-fee payments.
2. Valuation. The court could value the business with sufficient confidence to achieve a fair result. The three valuers used broadly comparable discounted-cash-flow methods. The court adopted the evidence of Mrs Hall and rejected the proposed terminal value because the business was volatile, unidentified future projects were uncertain, and the forecasts did not support a stable future profit stream. The one-off best-case forecast was also disregarded because the company had not achieved its ordinary forecast and had not repeated the exercise.
3. Immediate sale. An immediate forced sale was refused. The business had experienced its two worst years, a sale would attract a substantial discount, and the proposed appointment of a receiver was unlikely to improve the price or management of the business. Deferring the sale was in both parties’ interests where the wife was not in immediate need of funds.
4. Liquidity and fairness. The husband’s proposal to give the wife 50 per cent of whatever he ultimately received, capped by reference to current value, was rejected. It would have required her to share downside without sharing upside and provided no fixed payment date. The court instead fixed the wife’s entitlement and deferred payment until after the anticipated liquidity event, without a further discount. The court concluded that the result was fair and had regard to the factors in section 25 of the Matrimonial Causes Act 1973.