The Tribulations Of A Business Valuer
Why is everyone getting a divorce? An exaggeration, I know, but there’s certainly a lot of it about. And do I know it?
As a human being, I have only pleasurable memories of marriage. I married Gillian, a farmer’s daughter, in 1969, and we had 52 years of happy companionship until she died four years ago. She was wonderful. And how I miss her! It is very sad that others don’t share such happy experiences and find it necessary to bring their marriage to an end.
Of course, as a forensic accountant, I feel entirely different, because divorce is very good for business – too good, in fact. As you will see from my website I offer a wide range of services. As a mediator I have handled anything from expensive Italian sports cars which burst into flames to collisions on the high seas, and as an expert determiner (a form of arbitration), as well as many disputes over purchase and sale of companies I have handled such issues as dilapidation claims in department stores to the amount of rent payable to a farmer for a wind turbine. And as an expert witness, I have had the whole range of civil cases, such as contractual failings, diversion of trade, unfair prejudice, and crime cases, such as international fraud and Ponzi schemes, down to proceeds of crime.
Forensic accountants have to be versatile!
Yet what do I get these days? Endless requests for me to value the family company for divorce, so that the parties can achieve a clean break. Typically, the husband wants to keep the family business, so the wife takes the house, and they square things off from savings and pensions. It’s easy to establish the value of the house, if only on Zoopla, but what is the business worth? That’s my job, along with advising on tax liabilities if shares are to change hands, and whether there is any spare cash which could be taken from the business to facilitate a clean break.
And there is a lot of valuation work about. I seem to be getting several requests a week; I have twelve cases waiting for me to write the expert report as we speak, and in recent weeks, I have turned down six such cases because I simply can’t promise to write the report in a reasonable time.
Need help with a similar issue? Speak to Chris.
Once the expert report is written – and that can be a major undertaking, where I have to know the business in some detail – and when I have answered any Questions of the Expert (to be raised within 28 days of service of my report, the questions to be raised only once, and only for the purposes of clarification) my involvement is usually ended. I did have to give oral evidence at a hearing in Carlisle some weeks ago, but it was an exceptional business.
And yet, you never know. I am currently being sued for professional negligence for a valuation report I prepared more than six years ago. It was a most unusual case: five separate companies owned in various proportions by husband and wife, properties and assets in some companies used by other companies in their trade, and so on. But what made it particularly difficult were two things: the husband and wife’s property valuers, who couldn’t agree on the values, and a husband who was particularly difficult to give me the evidence I needed. In fact, my report was delivered to the court many months late, and I had to include a chapter in the report saying that this was due to the husband’s delays.
Perhaps this is why he chose to sue me. Who knows? But the outcome was that a claim form was issued to me, one day before the six-year limitation expired!
And I have to say that the claim is rubbish. The main claim is that I failed to advise on the legal and tax consequences of a settlement devised by counsel for both parties and agreed by the judge, some months after my retainer had ended. In fact, I knew nothing of the settlement until I saw the particulars of the claim just a couple of months ago.
Apparently, what happened is that the two barristers got together and agreed which assets should be taken over by which spouse, and the judge agreed. It turns out they got it wrong; for example, they decided that certain properties should be passed from one party to the other, but that property was not owned by the giving party, but by one of the companies. And so on. So, without my knowledge, three learned lawyers agreed a restructuring, and it was my fault that it was legally ineffective (why should a chartered accountant have given legal advice?) and inefficient taxwise (I was never asked) that the husband (allegedly) received in assets far less than his wife. And all that happened many months after I had been on the case.
I am insured at Lloyds of London, with cover well in excess of the amount being demanded, and with no excess. And I am being defended by Clyde & Co, who are doing an excellent job. This case will not cost me a penny whichever way it goes. But it’s a nuisance, and a blow to my professional pride, even though I know that the whole affair is nonsense. This is only the second claim I have ever received. The first was forty years ago, and it went nowhere. So I have a completely clean record. But I could well do without it.
Moaning over. Back to the numerous family businesses I need to value for divorce. And oh for a nice, clean fatal accident or fraud case!
