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Valuation of matrimonial property, personal and business assets during a divorce - A Valuer's Take

How to overcome the perceptions of bias and get a ROBUST valuation result


Based on the latest data from the Department of Statistics, the divorce trend in Singapore has been stable in the past ten years. A quick recap reveals:

From 2010 to 2020

Average number of divorces and annulments per year: 7,192

Median age of divorce for males: 42 years old

Median age of divorce for females: 38 years old

Median duration of marriage for divorced couples: 10.4 years

Whatever the circumstances surrounding the breakup, the legal principles to be applied in reaching a fair division of the matrimonial assets on divorce remain the same.


There are generally four steps the Courts follow which lead to the appointment of an independent Valuer (s) to help determine the equitable spilt of the matrimonial assets:

Step 1: Definition of Matrimonial Assets - This is defined as all the assets owned jointly or solely at the relevant date by the husband and wife, which were acquired during the marriage and prior to the relevant date. Gifts or inheritance do not form part of the matrimonial assets and are therefore not part of the settlement discussions.

Step 2: Determine the Relevant Date - This date is the earlier of i) the date that the husband and wife no longer interact as husband and wife or ii) the date of application to the Courts for the dissolution of the marriage.

Step 3: Identification and Valuation of the Matrimonial Assets - The matrimonial assets and liabilities first need to be identified and then valued at the relevant date. Therefore, it is crucial to establish and agree on that date as soon as possible. Thereafter, each party can take steps to obtain valuations for those assets and debts. For the family home, either the husband and wife agree on a valuation date or the Courts will determine the date.

Step 4: Joint appointment of the Independent Valuer - The husband and wife or their respective lawyers will jointly appoint an independent Valuer (s) to value all the matrimonial assets. For immovable assets such as properties, a property Valuer will be appointed. For business assets, a business Valuer will be appointed

The vast majority of divorces do not involve the valuation of business assets. However, for 10% to 15% of the divorces which have business assets as part of the matrimonial property, the job of the independent business Valuer is fraught with difficulties which he has to overcome to fulfil his responsibility to the Courts. Based on our experience with working with lawyers in divorces, the main valuation challenges when it comes to valuing the business assets are:

Valuation Challenge 1: Perception of bias from either the husband and/or wife. This often happens from Day 1 where the Valuers names suggested by either party are perceived to be the "Husband's" or "Wife's" Valuer. This could be ironical especially if the Valuer could have come from a referral and would barely know the husband or wife.

Valuation Challenge 2: Dispute over financial and business data used to value the business. Valuers rely heavily on financial and business analysis to determine the underlying value of any business. For most SMEs where financial statements are unaudited to begin with, such information often become disputed during divorce proceedings.

Valuation Challenge 3: Coming up with a business and financial forecast that the husband and wife agree to in valuing the business assets using say the Discounted Cashflows method is almost impossible.

Valuation Challenge 4: When we become a jointly appointed Valuer, it is common for the husband and wife to appoint their own experts to critique the analysis of the jointly appointed Valuer. And with support from the lawyers, we would expect further challenges and pushback.

Valuation Challenge 5: The Courts will need to be convinced that the independent Valuer has covered all grounds and the Judge is able to understand the valuation report. The independent Valuer's credibility is at stake.

It seems then that only the bravest and most worthy of business valuation experts would take up this job ! Maybe it is better for the Valuer to be the financial advisor to either the Husband or Wife than become the independent Valuer. It is easier to be a critic than to be in the centre of the ring !

As the saying goes," Good things never come easy". I personally welcome the role of an independent business Valuer for divorces or disputes. It is a great opportunity to brush up one's technical skills and also deeply think about how to handle the potential objections from either the husband and wife and their lawyers. There is also the immeasurable satisfaction when the valuation is accepted or praised by the Judge because you know that you have navigated successfully through emotional rollercoasters and your report would allow both the husband and wife to move ahead with their lives.

Having quite a bit of personal experience in this arena, I like to share my Top 5 + 2 tips in being a successful independent Valuer of business assets in divorce cases (okay 7 isnt a headline grabber but I had to give you what I know) :

Tip 1: Be technically competent and support all your analysis with facts and data. State clearly your valuation assumptions and disclose the limitations of data and how you overcame those limitations. You know that there is a financial expert each for the husband and wife waiting to shake any illogical assumptions.

Tip 2: Use as much industry and market data as possible to draw common-sense boundaries so that your valuation of the business is within the realm of industry and sector metrics.

Tip 3: Use the most conservative valuation method if possible. By this, I do not mean using the assets approach or cost approach. Rather choose the valuation method which can be supported by the most number of observable inputs. It is far better to rely on market and comparable companies data than to go off creating something of fiction. This could be a five year forecast which nobody can vouch for on its accuracy. I rather go for something that has been proven before such as the historical earnings of the company over a long period of time.

Tip 4: Use the KISS principle - Keep it Simple Stupid. Write simply and concisely when preparing the valuation report. The Occam's Razor method is a great way to clarify and simplify your thoughts and writing.

Tip 5: Play Devil's Advocate all the time. Often, we become intoxicated with our magnum opus (the 100 page valuation report) and get tunnel vision. Let your colleagues read through it and be open to alternative views and criticism.

Tip 6: Be totally open and transparent when communicating with all parties at all times. No side-emails or casual remarks ! Being the consummate professional will help overcome any perception of bias when you do the business valuation.

Tip 7: Stay Positive ! There will be moments or days when you get overwhelmed by critiques from both the husband and wife's financial experts. Keep your chin up and continue to march on because you know that as an independent Valuer appointed for a divorce settlement, you have taken on one of the most challenging professional roles :) .


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