Relationship Property

Relationship Property

To what extent do external economic factors impact the value of businesses when valued for the purpose of settling relationship property?

Expert valuers generally become involved in family law matters where the principal assets of a relationship include a business. These days, most business enterprises are operated within a company structure, so invariably the primary asset being valued is shares in a private company. Assuming we are engaged early on on the process, our initial instructions will be to value the parties’ interests in the company at the date of separation.

The parties interests in a family owned company will normally comprise

  • the shares in the company; and
  • advances to or from the company

Valuing these interests at the date of separation is not such a difficult task as financial information is more readily available, and it is unlikely that the business has, at separation, been affected by the proceedings that are on foot. However, as time passes, the task becomes more difficult as current relevant financial information becomes less readily available. Often, this results in extensive and forensic investigations being unnecessarily taken on behalf of an apparently disadvantaged party.

Sometimes the property will be owned by a family trust or trusts. However for present purposes, I will consider the asset to be prima facie relationship property