The Date of Valuation

We will work to ensure that your shares are valued at the right time, in the right way.

The date of a shareholding valuation can impact the outcome and if an unfavourable date is chosen, the valuation could negatively effect the value of your shares.

If the buyer and seller agree on the date, or the sale occurs as a result of provisions set out in a company's articles of association, there is normally no argument. However, if the valuation arises due to a shareholder dispute (e.g. the court has ordered one party to purchase the other’s shareholding), the date of the valuation becomes an important consideration.

Valuers often find it convenient to use the company's year-end date. It offers a point of reference as accounts may have already been drawn up by professionals by this time, but this date may prove more advantageous to one shareholder than another.

Say there are equal 50% shareholders in a limited company and at the end of the financial year it is in a very healthy position. But midway through the next year, one shareholder leaves and sets up a competing business, dividing the customer base, damaging profitability and devaluing the company.

In this instance, a valuation carried out at the date of the last available year end accounts would not reflect its true position, overvaluing the company and its shareholdings.

Generally speaking, the courts will determine that the appropriate valuation date is one that is as close as to the date of sale as possible, to best reflect the value of what the shareholder is selling. So the starting point is often the date of the court order itself, but if that proves to be unfair (e.g. if a company has been stripped of its value by that time through no fault of the complaining shareholder), the courts may choose other dates.

We can advise you on how best to choose an experienced valuer and navigate issues related to the date of valuation to ensure your shares are fairly valued.