Business Valuation in a Divorce or Shareholder Dispute in France

In a divorce as in a shareholder dispute, when the parties cannot agree on the value of the business, two routes exist: a joint, adversarial valuation, where both sides instruct the same chartered accountant, and a valuation the judge may order. Between shareholders, article 1843-4 of the French Civil Code applies where the law refers to it or where the articles of association provide for a sale or buy-back of shares without a determinable price: the disputed value is then set by an expert. The article does not apply to a divorce as such.

When a couple separates and one spouse runs a company or operates a fonds de commerce, the liquidation of the matrimonial regime always hits the same question: what is the business worth. The notary handling the liquidation and the lawyers need a defensible figure to build the split. Without it, the file stalls.

A business raises difficulties that a bank account or an apartment do not. It has no reference market, its value rests on debatable assumptions about the future, and it is illiquid: nobody sells half of a family SME on a Monday morning.

On top of that comes an information asymmetry that shapes the entire debate. The spouse who runs the company holds the accounts, the contracts, the order book and the cash. The other one often discovers the business through a liasse fiscale. A properly conducted valuation restores the balance: it forces the documents to be produced, explained and submitted to challenge.

One clarification: the chartered accountant quantifies value, he does not decide family law questions, which belong to the lawyer and the notary. Where the company is a SARL or a family SCI, the mechanics specific to parts sociales add a technical layer: approval clauses, shareholder current accounts, minority position.

Article 1843-4 applies in two cases: where the law refers to it to set the price of a sale of a shareholder's interest or of its buy-back by the company, and where the articles of association provide for such a sale or buy-back without the value being either set or determinable. If the value is contested, it is then determined by an expert appointed either by the parties or, failing agreement between them, by the president of the civil court (tribunal judiciaire) or of the commercial court, ruling under the accelerated procedure on the merits (procédure accélérée au fond) with no appeal possible. Where they exist, the expert applies the valuation rules laid down in the articles or in any agreement binding the parties (Légifrance, Code civil article 1843-4).

The consequence is significant: the value the expert determines binds the parties, and where the president of the court appoints him for lack of agreement, they no longer choose the professional. An amicable report, by contrast, remains a discussion and evidence item, which can be challenged, supplemented or set against another report.

This framework does not cover everything. It presupposes one of the two cases above and a dispute about value. A divorce, as such, does not fall within it. Nor do two shareholders freely negotiating the exit of one of them, where no statutory provision refers to article 1843-4 and no mechanism in the articles of association applies. They can, however, agree to entrust the setting of the price to a third party they appoint themselves in their agreement.

Whatever the route, the exit takes the form of a share transfer, with its registration duties and its formalities (Entreprendre.Service-Public, cession d'actions ou de parts sociales).

The choice of framework matters as much as the choice of expert, because it determines who pays and what the report is worth.

The one-sided amicable valuation#

One party instructs the expert and pays the fees. The report frames a negotiation, prepares a claim, or checks whether a proposed price holds up. Its weight is limited: the other side will object that it was never heard, and it will be right. Useful upstream, insufficient to close a dispute.

The joint adversarial valuation#

Both parties instruct the same professional through a joint engagement letter setting the valuation date, the list of documents, the timetable and the split of fees. The expert meets both sides, sends the same documents to each, collects their written observations and issues a single report. This framework shares the cost between the parties, generally runs on a shorter timetable than a court-ordered valuation, and produces a report the lawyers can attach to the settlement agreement.

The court-appointed valuation#

The judge orders a valuation, which is an investigative measure, and appoints the expert. One party advances the funds, and the judge decides who ultimately bears the cost. The expert issues a draft report, receives the parties' written submissions, then files the final report. It is a more formal and heavier framework than the other two. The article 1843-4 expert does not belong in this category: even when appointed by the president of the court, he is not a court expert (expert judiciaire) and sets the value himself.

Three requirements separate a contentious valuation from an ordinary valuation note.

Independence first, checked and stated in writing: the expert declares that he has no link with the parties, he is neither the company's accountant nor adviser to either spouse. It is the first thing opposing counsel will attack.

Then the adversarial process: every document received from one party is passed to the other, each side can file written observations, and the report answers them point by point.

Traceability last: every adjustment (director's remuneration, rent, personal expenses, non-recurring items) points to an identified document. As for methods, they cross-check each other rather than replace one another; the detail and the sector benchmarks are covered in our company valuation guide.

The tax administration's guide (June 2026 edition) recommends combining several methods (capitalisation of normalised earnings, DCF, multiples, yield value, net asset value), without making it a hard and fast rule. The weightings differ depending on whether the block of shares carries decision-making power, which in principle rules out a control premium and a minority discount. The guide states that an illiquidity discount is called for in two cases, a valuation based on revalued net assets alone and a valuation based on stock market data, and that it is not justified where the combination of methods arrives at the real value; it sets no general rate (DGFiP, guide de l'évaluation des entreprises et des titres de sociétés). Every discount has to be explained and justified case by case, taking care not to count the same risk twice.

The steered valuation#

Whoever holds the information has an economic interest in steering the outcome. The classic signals: director's pay that collapses or explodes in the last financial year, personal expenses booked as overheads, an unjustified provision, deferred investment, a significant contract signed just after the valuation date. None of these is fraud in itself. All of them can be adjusted, provided they are spotted.

Dependence on the owner-manager spouse#

A business whose client relationships and know-how rest on one person is worth less than an organised business. The tax administration's guide accordingly describes the so-called key-man discount, which case law recognises, while pointing out that the risk may already be built into the size premium and must not be counted a second time. Each side will argue the version that suits it. The answer is documentary, not ideological: is there a team, are there procedures, framework contracts, a sales capability that is not the manager? The same logic applies to client concentration: where a large share of turnover comes from a single client, a discount is open for discussion.

Accumulated cash#

A company that has not distributed for several years builds up cash that mechanically inflates the value of the shares. The operating shareholder will argue that it funds the working capital cycle and future investment, the other will see distributable reserves. The work consists in separating, with figures, the cash needed for operations from surplus cash. In the same spirit, shareholder current accounts are never merged into the value of the shares: they are receivables, settled separately.

Typical case (hypothetical example): a services SME shows adjusted EBITDA of 400,000 EUR. If one party applies a multiple of 4 times EBITDA and the other a multiple of 7 times, the same file produces an enterprise value, before net debt, of between 1.6 M EUR and 2.8 M EUR, a gap of 1.2 M EUR. Each party picks the assumption that serves it: the whole point is to justify, with supporting evidence, the multiple chosen.

The documents first: tax returns for the recent financial years, trial balance and general ledger, breakdown of shareholder current accounts, up-to-date articles and shareholders' agreement, minutes of general meetings, leases and finance leases, fixed asset schedule, loan schedule, significant client contracts, interim accounts at the valuation date, pending litigation and off-balance-sheet commitments. In a conflict, a missing document is never neutral: it will be read as withholding.

The timetable next. The valuation date is negotiated before work starts, not after the result has been read. Anticipating also avoids an expensive scenario: discovering at the hearing that the other side commissioned a one-sided report months earlier.

The choice of adviser last, on three criteria: independence from both parties, experience of adversarial work, and the ability to defend the report before a judge or a peer. The company's usual accountant is not in that position, since he advises the company, and therefore in practice the shareholder who runs it. Our firm handles these files under its company valuation engagement.

Court-appointed and adversarial engagements are quoted case by case: the time depends on the number of parties, the volume of documents, the meetings and the written submissions to answer. For orders of magnitude, our other valuation engagements start at 800 EUR excluding VAT for a valuation opinion on SCI shares or a simple micro-business, at 2,500 EUR excluding VAT for a full valuation report where turnover is below 2 M EUR, and at 4,500 EUR excluding VAT for turnover of 2 to 10 M EUR. A contentious engagement sits above that, because the adversarial process and the drafting of replies consume time that a standard engagement does not.

Who pays? In a joint adversarial valuation, the split is set in the joint engagement letter, for instance in equal shares. In a court-appointed valuation, one party advances the funds and the judge decides the final allocation. That cost is to be weighed against the valuation gap the expert has to settle.

Samuel Hayot, chartered accountant and statutory auditor registered on the list drawn up by the Haute autorité de l'audit (H2A), handles adversarial valuations from Paris 8. Three observations from actual files.

The technical debate rarely concerns methods, almost always adjustments. Two competent professionals agree on the approach and disagree on the market-rate remuneration of the manager, on whether an exceptional item is recurring, or on how much cash the business genuinely needs. That is where the gap is decided, and that is where the evidence must go.

The side that arrives with a documented file sets the terms of the discussion. A well-built adversarial report closes doors, a valuation note without supporting evidence opens them.

Finally, court-appointed expertise is not a goal, it is a fallback: longer, more expensive, and the outcome escapes the parties. As long as the relationship allows it, a joint adversarial valuation delivers the same technical rigour while keeping control of the timetable and of the possibility of a settlement. The files that settle best are those where both lawyers accepted a single expert from the start.