[2025] EWHC 2997 (Fam)

Company E multiplier: one expert tells me 7.5 and the other 8.5. Mr Dodge’s range is 7.5 to 8.5. Mr Strickland did not advance a range. Mr Boydell’s attack on the comparables would have had more force if Mr Strickland had found some different comparables. I have no doubt that each expert was trying to assist the court and was relying on their expertise in the figure that they advanced. I consider I have no good reason to prefer one to the other and so adopt 8 as the multiplier.

Company B valuation, or more accurately the value of the new shares in Company H acquired on the 1 October 2025: Mr Boydell advanced a figure of £4,468,000 having deducted the losses as he can best assess the for Company B from December 2023. Mr Lewis advances £6 million.

This is a nice logical point. If money has come out of Company A to fund Company B then there is an argument for accounting for that somewhere. There are two problems with it: (1) a large part of the forecast loss was depreciation of Company B not money coming out of Company A; (2) Company A has continued to make a profit since December 2023. Mr Lewis has told me that Company A made a profit post tax in 2024 of some £600,000 – which would have been after any loss of Company B (unless that was funded by AF, which would obviously not result in a need for me to account for it). I cannot in fairness add in losses of part when there appear to have been profits for the whole even after those losses.

This is an issue on which it is appropriate for me to take a practical approach. I have been using the December 2023 valuation as an approximation to a current valuation. My job is to consider the assets as they are now. Mr Boydell urged caution on me. He was unable to resist my observation that if his client had wanted a cautious approach to be taken he should have informed everyone promptly of the impending transaction so the accountants could have considered the overall impact on a current valuation. I am therefore going to be using the £6 million figure.

Company I valuation: Mr Boydell in the light of the change in the evidence of Strickland values this at the net asset value (£5,102,348) reduced to reflect the losses (as best he can assess them) since December 2023, so down to £2,519,265. Mr Lewis puts the figure at the net asset value but agreed with me that this needed to be discounted to reflect winding up costs – as Mr Strickland had suggested. I take the view that I prefer Mr Strickland’s revised position to a simple net asset value – that, is, consider what would be left after a winding up. I think these costs will be significant - mostly the value is in stock and that will need to be discounted, there are leases which will have time to run, there will be the costs of laying off members of staff. I appreciate that this is rough and ready but I will reduce the figure by 40% to £3,061,408.

Minority Discount: this I record is not an accountancy issue in that it is a matter of fact for me to determine, but it is part of the valuation exercise that has been undertaken by the accountants. In the circumstances of this case the issue is not one which requires complicated findings on my part. Both parties are assuming that the business will carry on and the husband will continue to draw his income from it. It is obvious that on a sale agreed by the three brothers there will be a 1/3 division of the sale proceeds in accordance with the shareholding. If the husband were forced to sell now to a third party, a third party that would require a discount because the third party would be at a significant disadvantage to the brothers in the running of the business. There is no evidence to suggest that either of the brothers would buy the husband’s shares.

The minority discount, which is put by both experts at 30%, is not relevant to the circumstances that I am being invited to consider. It is at best some sort of indicator to me of the illiquidity discount that might be appropriate.

Husband’s income: Mr Dodge had provided in his report two different scenarios for the husband’s sustainable income from Company A, and then in evidence outlined a third. Mr Lewis opts for scenario 2. Mr Boydell takes a different account that I will outline below. It is right that the husband had said to Mr Dodge that AF does not receive a dividend (to which he would be entitled) because he receives the licence fee. The dividend pot is shared between him and AE. I consider that this concession, and the fact that this is what has happened in the past, is good and solid reason for me to find that this this will continue to happen in the future, notwithstanding that this level of dividend is not something to which the husband is legally entitled. I do not however go with Mr Dodge to scenario 2. The point the husband makes to Mr Dodge is as to sharing of dividends - not drawings. Mr Dodge has relied in his calculations on the extra director’s loan the husband has had in the calculations he relies on for his scenario 2. A loan is different from dividends. I do need to acknowledge that even the dividends have been uneven as between AE and the husband in the past. I do however hold back from making an assumption that not only exceeds the husband’s legal entitlement by assuming AF will receive no dividends, but also that AE will get less than the husband on an ongoing basis. So I conclude on scenario 3. I note that this gives a gross income figure, using Mr Dodge’s approach of half of £3,710,000 = £1,855,000 p.a., and net income of £1,125,058 p.a.

Mr Boydell advances a figure of net income for the husband of £168,101 based on a gross dividend figure of £250,000. There was no evidence from Mr Strickland to suggest that Mr Dodge is wrong in his assessment that the sustainable pot that is available to be distributed as income is £3.7 million and there was no argument from Mr Boydell that Mr Dodge was wrong in that assessment.

The difference here is that the husband’s case as put in closing was that he would need to repay the DLA of £5.6 million by what dividends might be allocated to him over and above the £250,000 figure. So for my purposes I should treat him as having merely the £168,000 which is the net amount resulting from dividends of £250,000.

This presents a number of problems:

The way that I will deal with this is by sticking to my assessment as set out above as to the sustainable drawings, and when considering maintenance claims bear in mind that the husband does have the debt of £5.6 million and I can predict that there will be pressure, but, in the light of his oral evidence, not overwhelming pressure on him to pay that back.

On this point I should note two further things: