Business Valuation in Divorce Proceedings: FPR Part 25 Guide

In divorce financial remedy proceedings, a spouse's interest in a company is a matrimonial asset subject to sharing principles under the Matrimonial Causes Act 1973. The Family Procedure Rules Part 25 govern how valuation experts are instructed, what their reports must contain, and their duty to the court.

Court permission may be required before instructing an expert in family proceedings - check the current practice direction and case management directions before incurring fees.

Expert reports must be independent, address the questions in the letter of instruction, and comply with FPR Part 25 and Practice Direction 25A. The expert's primary duty is to the court, mirroring CPR Part 35 principles established in The Ikarian Reefer.

Form E disclosure should include business accounts, tax returns, and commentary on company value. Experts often receive incomplete information - the letter of instruction should specify what further disclosure is required.

Courts frequently exclude personal goodwill - value tied to one spouse's reputation and skills - on the basis it would not transfer on sale. Experts must analyse whether goodwill is personal, business, or mixed, with clear reasoning.

Add-back arguments address excessive salary, perks, or unexplained drawings treated as available income. Normalisation adjustments must be evidenced and reasonable; contested add-backs are a common source of expert disagreement.

Single Joint Experts under FPR 25.11 can reduce costs where both parties agree or the court directs joint instruction. Written questions may be put to the SJE. Party-appointed experts remain common in high-net-worth cases with complex corporate structures.

Link matrimonial valuation to sector guides for professional practices and technology businesses where standard EBITDA multiples may not apply.