Shareholder discounts – Cantwell & Cantwell [2017]

April 17, 2017

Cantwell & Cantwell [2017] FamCA 117 (March 2017)

This family law matter involved a shopping list of property interests held via various trusts, companies and partnerships.

Within the property interests were two businesses, called Suburb B and Suburb C. The Cantwell’s (husband and wife) directly and indirectly owned:

  • Suburb B – 50% interest (the husband)
  • Suburb C – 35% interest (25% the husband, 10% the wife)

The businesses and the underlying equity in each were valued…nothing surprising here.

The valuer then applied a discount for lack of control and liquidity. These totalled 20% for Suburb B and 15% for Suburb C.

The discounted values in the business valuation report were accepted and formed part of the settled balance sheet of the parties.

It seems the valuer addressed the lack of control held by the Cantwell’s in each business. The husband jointly controlled Suburb B, yet a discount of 5% was applied.

The case notes provide little insight into the discussion within the courtroom, however support the notion that shareholder level discounts apply….even in the Family Court.

No mention of “value to the owner” was in sight!