CASE STUDY

Valuation of a security company in a matrimonial dispute
Matrimonial

Valuation of a security company in a matrimonial dispute The expert was instructed to value a shareholding in XYZ Limited, a company in the safety and security sector, founded many years ago by the current managing director, Mr X and another key person Mr Y. On incorporation in 1995, the voting shares were divided equally between the two and the non-voting shares divided equally between their spouses. In 2016, Mr Y divorced Mrs Y and the Y’s holding of XYZ Limited required valuing for matrimonial proceedings. In question was whether the business was a quasi-partnership or if Mr X had control in practice and therefore valuations were prepared on a discounted and non-discounted basis. The company was valued on the capitalization of earnings methods and the complexities of the case included: 1. The recent change in the company’s strategy from high risk, high return jobs to low risk, low return jobs. 2. Accelerated Payments Notices 3. Large levels of charitable donations, year on year 4. Treatment of owner-manager remuneration or return on investment The quantum of the overall company value fell into a range between £3.5 to £4 million; with a commensurate discount for the proportion of Y’s holdings.

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