How to Value a Company in a Divorce Context? Methods, Steps and Legal Considerations (France / Switzerland)

Introduction: When Corporate Finance Enters the Courtroom

The divorce of a couple who co-own a business is one of the most complex situations an independent valuation firm can face. In a single case, it brings together all the disciplines of corporate finance — valuation, financial analysis, taxation, corporate law — compounded by an additional and formidable constraint: the judicial or quasi-judicial setting, with its demands for methodological rigour, documented assumptions and adversarial defence of conclusions.

Business valuation in the context of divorce refers to the engagement in which an independent financial expert determines the fair market value of equity interests held by one or both spouses, in order to enable the equitable settlement of the matrimonial property regime. It differs from a standard M&A valuation assignment through its legal grounding — the applicable matrimonial regime, the legally prescribed valuation date, the adversarial principle — and through the conflictual nature of its environment: two parties with divergent interests, a judge to be persuaded, a counter-expert to rebut.

Damodaran, in his work on the valuation of unlisted companies, observes that value is not a single, objective figure, but the result of a professional judgement grounded in documented and defensible assumptions. This observation takes on particular resonance in divorce proceedings: the expert-valuer who cannot justify each assumption to an experienced counter-expert and a demanding court compromises not only the report, but the credibility of the entire process. (Damodaran, The Dark Side of Valuation, 2nd ed., FT Press, 2009.)

The central question addressed by this article is therefore: how can an independent expert-valuer intervene effectively in a divorce proceeding involving a business — from acceptance of the mandate to the defence of conclusions before the court — while mastering the distinct legal constraints of each country, the methodological rigour expected by French and Swiss courts, and the specific adjustments essential to a defensible valuation? This question is all the more critical since the legal framework differs fundamentally between France and Switzerland, and valuation methods are not universally standardised.

This article presents the complete Hectelion methodology for this type of engagement, structured around seven themes. We first analyse the comparative legal framework France-Switzerland, then the pre-mandate checklist, the complete valuation methodology — including net assets, adjusted net assets, the Swiss practitioners' method, DCF, yield-based value and comparables — specific divorce adjustments, the expert report structure with France and Switzerland adaptations, and techniques for defending the valuation. The methodology is illustrated by two concrete, quantified cases drawn from Hectelion's practice.

Comparative Legal Framework: France and Switzerland

The primary distinction between the two countries concerns the default matrimonial property regime and its consequences for the valuation base. This regime determines which assets — and therefore what fraction of the company's value — fall within the scope of distribution.

French Law: Matrimonial Property Regimes

The French Matrimonial Property Regimes

The community of accrued gains (communauté réduite aux acquêts) is the default regime for all married couples without a prenuptial agreement in France. Assets acquired during the marriage — including equity interests subscribed or acquired with marital funds — are jointly owned. The valuer must therefore value all shares acquired with community funds. By contrast, shares received by inheritance or gift remain separate property and fall outside the community estate.

Separation of property (séparation de biens) is the regime in which each spouse retains full ownership of their assets. The valuer intervenes here to value the shares of a spouse whose other half disputes the value — typically in the context of a claim between spouses or a co-owned company.

Community of universal assets (communauté universelle, art. 1526 C.civ.) is the regime in which the entirety of both spouses' assets — including those held before marriage and those received as gifts or inheritances — forms a single community estate. For the valuer, this is the broadest valuation base: even pre-marital equity interests fall within the scope of distribution. This regime is frequently adopted by entrepreneurial families to protect the surviving spouse, but it can create significant difficulties on divorce where a business was created before the marriage.

Participation in accrued gains (participation aux acquêts) is an optional regime — rarely used in practice in France. It functions as separation of property during the marriage, but upon dissolution the spouse whose wealth has grown less is entitled to half of the other's enrichment. Importantly, this regime must not be confused with the Swiss participation aux acquêts, which is the default legal regime and operates differently upon liquidation.

Article 1843-4 of the Civil Code: The Expert's Central Tool

Article 1843-4 of the French Civil Code, as revised by Ordinance No. 2014-863 of 31 July 2014, is the reference mechanism for determining the value of equity interests in the event of a dispute. It provides that the value shall be determined by an expert appointed either by the parties jointly, or — in the absence of agreement — by an order of the President of the court acting under expedited proceedings, with no right of appeal against the appointment save for excess of powers.

Two cumulative conditions trigger the application of Article 1843-4: either the law expressly refers to this article to fix the price conditions for a transfer; or the articles of association provide for the transfer or buyback of equity interests without determining or enabling the determination of their value. Since the 2014 Ordinance, the appointed expert must respect any valuation rules and methods set out in the articles of association or in any agreement binding the parties.

The valuation reference date is a frequent source of dispute. The Court of Cassation has established that the expert must adopt the date closest to the actual repayment of the equity interests. In a divorce context, this date is generally that of the liquidation of the matrimonial property regime.

The Role of the Family Law Judge (JAF) and the Notary

In France, it is the Family Law Judge (Juge aux Affaires Familiales, JAF) who rules on the divorce and orders interim measures. Liquidation of the matrimonial property regime is then entrusted to a notaire liquidateur, who may engage a financial valuation specialist to value complex assets — notably equity interests. The valuer may intervene as the notary's technical adviser, as an expert appointed by the parties, or as a court-appointed expert where there is deadlock.

Swiss Law: Matrimonial Property Regimes

The Legal Default: Participation in Accrued Gains (art. 196–220 CC)

In Switzerland, the legal default matrimonial property regime — automatically applicable to all married couples without a notarial marriage contract — is participation in accrued gains (art. 196–220 of the Swiss Civil Code, CC). This regime distinguishes two asset pools for each spouse: personal property (assets owned before marriage, inheritances and gifts received during marriage, art. 198 CC) and accrued gains (employment income, income from personal property, assets acquired with accrued gains during the marriage, art. 197 CC).

Upon dissolution of the regime — which takes effect on the date the divorce petition is filed (art. 204 al. 2 CC) — each spouse reclaims their personal property and shares equally in the accrued gains with the other spouse (art. 215 CC). Where the business was created or developed during the marriage with accrued-gains funds, its value forms part of the accrued gains and must be shared. Assets are valued at fair market value at the date of liquidation (art. 211 CC), or at the date of the judgment in judicial proceedings (art. 214 CC).

Separation of Property and Community of Property

Swiss spouses may also elect, by notarial marriage contract, for either separation of property or community of property. Under separation of property, there is no sharing of accrued gains upon dissolution — each spouse retains their entire estate. Community of property pools the spouses' assets into a jointly managed common estate; upon dissolution, the common estate is divided equally. These alternative regimes are less common but are found in cases involving entrepreneurial families who have anticipated business protection.

No Official List of Experts: An Opportunity for the Independent Valuer

Unlike France, Swiss law provides no mandatory official list of judicial experts in financial valuation. Article 183 al. 1 CPC grants the court full freedom to appoint one or more experts, chosen solely on the basis of technical competence and independence (art. 183 al. 2 CPC referring to the recusal grounds applicable to judges).

"Unlike France, there is no official list of judicial experts in Switzerland restricting the judge's or prosecutor's choice, except in certain fields where the Confederation and cantons may appoint permanent or official experts [...]. The judge is therefore free to designate an expert of Swiss or foreign nationality provided that, according to their sources, the expert has the knowledge useful for clarifying the questions posed." — Dr Cyrielle Friedrich, Attorney at the Geneva Bar

This freedom is accompanied by a key procedural obligation: Article 48 CPC imposes on the appointed expert a duty of prior disclosure. Before commencing the engagement, the expert must spontaneously declare any grounds for recusal — a link with the parties, a personal interest in the outcome, an incompatible prior engagement. Hectelion systematically formalises this declaration in the engagement acceptance letter addressed to the court or the parties' counsel.

In France, the framework is structurally more restrictive: to be appointed as a judicial expert by a judge, one must in principle be registered on the list of a Court of Appeal — with a complete application file, review process and oath. Outside the list, a judge may appoint any expert provided they take an oath before commencing the engagement (art. 232 and 262 of the French CPC). In practice, French judges rely systematically on these lists for judicial appointments — in contrast to Switzerland, where the choice is entirely free.

Before Accepting the Mandate: The Essential Checklist

A valuation mandate in a divorce context is not an ordinary engagement. The conflictual environment, pressure from the parties, significant financial stakes and the possibility of judicial confrontation demand particular rigour from the outset. Accepting a poorly defined mandate means exposing oneself to a contested report, potential liability, or loss of professional credibility.

Verifying Independence and Conflicts of Interest

Independence is the sine qua non of any valuation mandate — and especially so in a divorce context. The valuer must examine their links — direct or indirect — with the parties, their advisers, the company and its shareholders. A prior advisory relationship, an accounting mandate, a commercial relationship or even a personal friendship must be disclosed — and may justify declining the engagement.

In Switzerland, Article 183 al. 2 CPC provides that the recusal grounds applicable to judges apply equally to experts. Grounds for recusal include a personal interest in the matter, a familial or marital relationship with a party, or any other relationship that could cast doubt on impartiality. In France, similar requirements apply to court-appointed experts under the Code of Civil Procedure.

Questions to address systematically before accepting:

• Have I worked for either spouse, their lawyer, or the company in the past 5 years?
• Do I have any direct or indirect financial interest in the company or a competing sector?
• Are any of my partners or colleagues linked to either party?
• Have I publicly expressed an opinion on the company's value or on this type of case?
• Could the engagement create an unfavourable precedent for other clients?

Defining the Scope and the Engagement Letter

The engagement letter is the contractual document that defines the valuer's rights and obligations. In a divorce context, it must be particularly precise on five essential points:

1. Scope of assets valued. Which company or companies? Which interests? Are personal property assets included or excluded? Is the holding company valued on a look-through basis (subsidiary-by-subsidiary) or on a consolidated basis?

2. Reference date. A crucial point that must be settled before work begins. Date of the divorce petition? Date of de facto separation? Date of judgment? In France, the date depends on the applicable regime and case law. In Switzerland, art. 214 CC sets the date-of-judgment principle, but the parties may agree on a different date in amicable proceedings.

3. Applicable valuation standard. IVS (International Valuation Standards)? IVSC? French internal standards (APCE, SFEV)? The chosen standard must be stated in the engagement letter and in the report.

4. Mandate context. Joint amicable expert appointed by both parties? Expert appointed by one party? Court-appointed expert? The status determines the extent of obligations, the level of confidentiality and the scope of the report.

5. Fees and payment terms. In a divorce context, the question of payment is particularly sensitive. Who pays the expert? How are fees allocated between the parties? What retainer is payable on signature?

Access to Documents: Rights and Limitations

Access to the company's accounting and financial records is a prerequisite for any serious valuation. In practice, it is frequently difficult or contested — notably when one spouse manages the company and refuses to share information with the other.

In France, the expert appointed under Article 1843-4 C.civ. has extensive powers. The Court of Cassation held in its judgment of 27 November 2024 (No. 23-17.536) that refusal to transmit the documents required for valuation constitutes a manifest and unlawful disturbance, opening the way for enforcement measures. In Switzerland, Article 186 CPC grants the tribunal-appointed expert the right to question the parties and to consult the case file.

Minimum documents required before commencing work:

Documents common to both jurisdictions:

• Last 3 full financial statements (balance sheet, income statement, notes)
• Up-to-date articles of association, shareholders' agreements and share register
• Management accounts and interim financials (if reference date ≠ year-end)
• Key contracts (leases, client, supplier, financing agreements)
• Inventory of off-balance-sheet assets (brands, patents, identifiable goodwill)
• Any document relating to a recent transaction in the company's shares

France-specific documents:

• Tax packages for the last 3 financial years (forms 2050–2059 and 2065)
• Fixed assets register (form 2055) for identification of latent capital gains
• Dividend distribution history and inter-company current account movements
• Any ongoing or notified tax reassessments

Switzerland-specific documents:

• Fiscal valuation of shares (cantonal form — CFAF Circular no. 28)
• Tax returns for the last 3 years (ICC / IFD)
• Note on the qualification of shares as private or commercial assets

Note: Switzerland has no tax package equivalent to the French liasse fiscale. The fiscal valuation of shares is established by the cantonal tax authority under CFAF Circular no. 28 — a useful reference but not binding for judicial valuations. Forms vary by canton (Vaud, Geneva, Zurich).

Valuation Methodology: Applicable Methods and Their France / Switzerland Specificities

The choice of valuation methods in a divorce context must be justified by the company's profile, the applicable matrimonial regime and the chosen reference date. Swiss and French practice has converged on distinct method sets that must be understood separately. This chapter presents the methods by jurisdiction, then their structural differences.

Methods Applicable in Switzerland

The Practitioners' Method (Praktikermethode)

The practitioners' method is the reference method in Switzerland for the valuation of unlisted SMEs, recognised by cantonal courts, the tax authorities (CFAF Circular no. 28) and Swiss legal doctrine. It is particularly suited to the divorce context because it combines patrimonial solidity and profit-generating capacity in a single transparent and defensible formula. It rests on two components: the substantial value (equivalent to the adjusted net asset value) and the yield value based on the average historical normalised net profit.

Standard formula: Practitioners' Value = (1 × Substantial Value + 2 × Yield Value) / 3

The yield value is calculated on the basis of the average normalised net profit over the last 3 to 5 financial years, capitalised at the rate set by CFAF Circular no. 28. This rate is a flat administrative rate: in 2024, the CSI (Conférence suisse des impôts) rate is fixed at 8.75%. This is a reference rate — effective taxes may deviate from it depending on the company's specific risk profile. For a judicial valuation, the valuer may depart from this flat rate provided the departure is explicitly justified.

Transaction Comparables

The transaction comparables method uses the multiples (EV/EBITDA, EV/Revenue) observed in recent comparable transactions in the same sector and of similar size. It is considered the most directly relevant for determining fair market value as required by Art. 211 CC. The Swiss Federal Court confirmed in a 2025 ruling — which sets a precedent — the reliability and admissibility of the transaction comparables method as a valuation basis in the context of matrimonial property regime liquidation.

Market Comparables — Direct and Indirect

The direct market comparables method applies the multiples (EV/EBITDA, EV/Revenue, P/E) of listed companies in the same sector. The indirect method uses sector indices or ETFs as proxy references. A liquidity discount of between 20% and 35% must be applied and documented to reflect the absence of a stock market listing. In Switzerland, access to listed comparables is more limited — the SMI covers few SME segments — and reference to European comparables (Euronext, XETRA) is frequent and accepted by courts.

Yield Value on Adjusted EBITDA — Discount Rate

This approach capitalises the average adjusted EBITDA over the last three historical years at a discount rate reflecting the company's risk profile. Formula: Enterprise Value = Average Adjusted EBITDA (Y, Y-1, Y-2) / Discount Rate. The reference risk-free rate in Switzerland is the Swiss Confederation 10-year bond (approximately 1.0–1.5% in 2024–2025). Implicit multiple ranges for Swiss SMEs: Construction 3.5–5.5× | B2B Services 4.0–7.0× | Trade 3.0–5.0× | Light industry 4.0–6.0×.

DCF (Discounted Cash Flows)

The DCF discounts forecast free cash flows at the WACC. In the Swiss divorce context, it is only retained as a primary method if a credible and documented business plan exists independently of the divorce proceedings, and if the growth assumptions are verifiable. A sensitivity analysis on the WACC (±1%) and the terminal growth rate is mandatory.

Methods Applicable in France

The BOFIP Framework and Fiscally Recognised Methods

In France, the tax doctrine published in the BOFIP (Bulletin Officiel des Finances Publiques) governs the valuation of unlisted equity interests, particularly in the context of IFI and gratuitous transfers. While these fiscal methods are not directly binding on an expert appointed under Art. 1843-4, they constitute a practical reference that courts and opposing experts will cite. The valuer must be able to position their valuation relative to this doctrine and justify any significant departure.

Net Asset Value (NAV) and Adjusted Net Asset Value (ANAV)

Net asset value (NAV = Total Assets − Total Liabilities) is the valuation floor. It is the starting point for the ANAV calculation. The adjusted net asset value (ANAV) restates accounting values at market value: property revaluations, stock write-downs, doubtful receivables, commercial goodwill, off-balance-sheet commitments, deferred taxation. In France — unlike Switzerland — latent capital gains bear deferred corporate tax (at 25% IS plus any surcharge), which must be deducted to obtain a comparable net value. ANAV is the primary method for holding companies and real estate entities.

Transaction Comparables

Same logic as in Switzerland — EV/EBITDA or EV/Revenue multiples observed in recent comparable French SME transactions. The case law recognises this method as appropriate for establishing fair market value under Art. 1843-4.

Market Comparables — Direct and Indirect

Application of multiples from French and European listed companies in the same sector. The liquidity discount (20–35%) is codified in French judicial expert practice and must be explicitly justified in the report.

Yield Value on Adjusted EBITDA — Discount Rate

Same approach as Switzerland: Enterprise Value = Average Adjusted EBITDA (Y, Y-1, Y-2) / Discount Rate. The three-year average smooths cyclical variations and is more defensible before a court than using a single financial year. The discount rate is built on the OAT 10-year rate (~3.0%), the French equity risk premium, and a size premium for unlisted SMEs.

DCF

Same conditions as Switzerland. In France, the terminal value (Gordon-Shapiro model) is particularly sensitive to the assumed long-term growth rate — a 0.5-point variation can change the value by 15–25%. The sensitivity analysis is therefore critical, especially since the opposing expert will systematically challenge this assumption.

France / Switzerland Comparison: What Really Changes

The differences between the two jurisdictions are structural and must not be treated as simple parameter adjustments. They concern: the reference method (Swiss practitioners' method vs French BOFIP), deferred taxation (absent in Switzerland for private wealth, significant in France), the risk-free rate (1.2% CH vs 3.0% FR), treatment of personal goodwill (not shareable in Swiss accrued gains per the Federal Court), and applicable case law. Any report intended for cross-border proceedings must explicitly document these gaps. See also our article: Business Valuation: Key Differences Between France and Switzerland.

Specific Adjustments in the Divorce Context

This is the most operational — and most differentiating — chapter of any divorce valuation report. Adjustments aim to determine a normalised profit figure representative of the company's true economic performance, independently of management decisions that may have been influenced by the marital situation. Each adjustment must be documented, quantified and justified by a supporting document annexed to the report.

General Adjustments — Applicable in Both France and Switzerland

Management Remuneration: Is the Salary Market-Rate?

Management remuneration is rarely market-rate in family SMEs. It may be understated (to minimise social charges) or overstated (to extract resources). The valuer must compare effective remuneration to the salary a manager of equivalent profile would receive for the same function in a company of similar size and sector. An understated salary of 30k per year on a multiple of 5× represents a 150k valuation gap — an issue that fully justifies the analytical effort.

Replacement of the Departing Spouse

Where one spouse occupies a role in the business and is set to leave following the divorce, the valuer must integrate the replacement cost into the normalised charges. Two questions arise: must the role be replaced? At what market cost? An unpaid but contributory role generates an artificial saving for the company that must be adjusted.

Benefits in Kind and Mixed-Use Charges

Mixed charges — both professional and personal — are extremely common in family SMEs. They must be identified and added back to the normalised profit for their personal element:

• Company vehicle used privately (with no or understated benefit in kind declared)
• Fuel, insurance and maintenance charged to the company for private use
• Mobile phone and personal subscriptions
• Trips and representation expenses with mixed or personal character
• Rent for an apartment or residence made available to the director
• Family home maintenance costs billed to the company
• Oversized life insurance or pension cover for personal benefit
• Memberships of clubs or associations of a personal nature

Unremunerated Services Between Spouses

Unpaid work by the spouse (bookkeeping, secretarial, client reception), provision of premises owned by one spouse at below-market rent, loans granted on favourable terms — all such flows must be restated at market value.

Intra-group Rents and Property Leases

Does the operating company lease its premises from an SCI or entity held by one or both spouses? Is the rent at market rate? An understated rent artificially inflates the operating company's EBITDA. Comparison with local market rental values is essential.

Surplus Cash and Shareholder Loans

Cash in excess of working capital requirements (typically beyond 2 months' revenue) must be isolated and added to the operating value. Shareholder loans held by the spouses must be qualified (personal property or accrued gains depending on their origin) and any abnormal remuneration restated.

Working Capital Requirement (WCR)

Normalised WCR is central to the divorce valuation: it determines the operating value (via DCF) and the restated net debt. The valuer must calculate the normative WCR — representing the structural financing requirement — rather than the accounting WCR, which may be distorted by opportunistic decisions taken in anticipation of the divorce (accelerating collections, extending supplier payment terms).

Restated Net Financial Debt

Net financial debt (NFD) includes all interest-bearing financial liabilities: bank loans, capitalised finance leases, remunerated shareholder loans, bonds. Restated NFD includes off-balance-sheet liabilities identified during the engagement (unfunded pension obligations, guarantees given, ongoing litigation). Equity Value = Enterprise Value − Restated NFD + Surplus Cash.

Leases and IFRS 16 — Restatement of Lease Liabilities

Under IFRS 16 (applicable since 2019 for IFRS companies), lease contracts are capitalised on the balance sheet. For SMEs preparing statutory accounts (PCG in France, CO in Switzerland), finance leases are often off-balance-sheet. The valuer must identify and capitalise significant lease obligations: discounting future lease payments at the company's marginal borrowing rate to reconstruct the implied debt, and adjusting EBITDA (adding back the lease charge, deducting the depreciation of the right-of-use asset). This adjustment is particularly important for companies with significant rented property or vehicle fleets on lease.

Switzerland-Specific Adjustments

Capital Gains Tax: A More Nuanced Picture

The question of deferred taxation in Switzerland is more nuanced than a simple absence of taxation. The basic rule: individuals who hold shares as private wealth (which is the case for the majority of family SME shareholders) are not taxed on capital gains upon disposal — this is the Swiss principle of exemption from private capital gains tax.

Three important exceptions apply. First, if the shares are characterised as commercial assets (self-employed activity, regular buying and selling of interests), the gain is fully taxable at ICC/IFD. Second, at the company level, capital gains realised on the disposal of assets (real estate, equipment, investments) are subject to corporate income tax. Third, cantons may levy specific property gains taxes on disposals by individuals.

The correct approach for the valuer: (1) determine whether the shares are held as private or commercial wealth; (2) identify latent capital gains at the company level and apply the corresponding corporate income tax to the ANAV; (3) apply no deferred shareholder-level tax if the shares are private wealth.

Personal Property / Accrued Gains Distinction

Reconstructing the company's value at the date of marriage is sometimes required to isolate the gain generated during the marital period (accrued gains) from the initial value (personal property). This requires a retrospective calculation from historical accounts. The dissolution of the regime takes effect on the date the divorce petition is filed (art. 204 al. 2 CC), but the value is fixed at the date of judgment (art. 214 CC) — this duality of dates requires the valuer to document two distinct moments.

Treatment of Personal Goodwill in Swiss Accrued Gains

The Swiss Federal Court has established a clear distinction: goodwill linked to the personal reputation and skills of the practitioner-spouse is not shareable within accrued gains — it belongs to that spouse as personal property. Only institutional goodwill, transferable to a purchaser, falls within the accrued gains base. This principle is applied more strictly in Switzerland than in France and must feature explicitly in the report.

Wealth Tax (ICC / IFD)

The value retained under the practitioners' method directly influences the cantonal wealth tax (ICC) and federal wealth tax (IFD) base. The valuer must explicitly indicate whether the value determined for distribution purposes differs from the fiscal value resulting from CFAF Circular no. 28, and justify any such difference.

France-Specific Adjustments

Deferred Taxation on Latent Capital Gains

In France, latent professional capital gains are taxable upon an actual disposal. The net-of-tax value must be calculated applying the applicable allowances based on holding period and company size (art. 151 septies and 238 quindecies CGI). Corporate tax at 25% applies to net capital gains, with possible exemption regimes depending on the case. This deferred taxation reduces the net value and must be deducted from the ANAV to obtain a comparable net value.

Distribution Tax (Droits de partage)

In France, the sharing of community assets is subject to a distribution tax of 1.1% on net distributed assets (since 2022). The valuer should mention this transaction cost in the report, even if it is not systematically deducted from the share value.

IFI — Real Estate Wealth Tax

The value retained for the company's shares may influence the IFI base where the company holds real estate. The valuer must specify whether the value determined for distribution purposes is a fair market value or a fiscal IFI value — these two concepts may legitimately differ.

Drafting the Valuation Report: Structure and Content

The valuation report in a divorce context is both the final deliverable and the expert's primary instrument of defence. Its structure must be sufficiently standardised to be immediately legible by a judge or lawyer, and sufficiently documented to withstand the challenge of an opposing expert.

Standard Hectelion Report Structure

1. Disclaimer

The disclaimer opens the report. It specifies the nature of the mandate (amicable or judicial), the legal basis (art. 1843-4 C.civ. in France / art. 183 CPC in Switzerland), the expert's declaration of independence and impartiality, the limitations of the valuation, and the confidentiality clause. In France, the declaration of impartiality engages the expert's civil and criminal liability.

2. Table of Contents

The structured table of contents allows the judge, lawyers and opposing expert to navigate immediately to the relevant section. It is essential in any report intended for judicial proceedings.

3. Glossary

The glossary defines the technical terms used in the report (EBITDA, ANAV, WACC, market value, yield value, practitioners' method, personal goodwill, etc.). It is all the more important when the report is addressed to non-financial readers — family law judges, lawyers, notaries.

4. Context of the Valuation Work

This section covers four distinct elements: the objective of the engagement (valuing equity interests for the purpose of matrimonial property regime liquidation); the context of the intervention (divorce proceedings, ongoing disputes over value); the scope of the work (entity or entities valued, interests included or excluded, reference date and its legal justification); and the information sources and limitations (exhaustive list of documents received, gaps, any refusal to communicate and its consequences on valuation quality).

5. Executive Summary

The executive summary is the most-read section — and often the only section read at first instance by the judge. It must contain five essential elements: presentation of the transaction and its rationale; financial and non-financial overview of the company (sector, size, governance, key indicators); indicative enterprise value with sensitivity table; indicative equity value and per-share value with result sensitivity — it is critical to present a value range, as the valuer must act as arbiter, provide a negotiation range for the parties, and defend the valuation before the court and the opposing party; summary of methods and their convergence.

6. Company Overview

Historical background, description of operations and products/services, legal and ownership structure, historical financial data over 3 to 5 years (P&L, balance sheet, WCR, cash flows), and key performance indicators (revenue, EBITDA, margin ratios, leverage).

7. Management and Organisation

Details of the management team, the respective roles of the spouses in the business, the organisational structure, headcount and distribution, and dependence on the key manager — a central element for assessing personal goodwill. This section documents the respective contributions of the spouses that will serve as the basis for the adjustments in the preceding chapter.

8. Market Overview

Market analysis positions the company in its competitive environment: addressable market size and growth, key competitors, competitive positioning, sector trends. This section justifies the DCF growth assumptions and validates the relevance of the selected comparables.

9. Company Valuation

The technical core of the report. It includes: documented adjustments with a bridge table from accounting to normalised profit; detailed application of each method with sourced parameters; sensitivity table by method; reconciliation of methods and the retained central value with its justification; and convergence analysis across methods. In a divorce context, this section must be particularly explicit on personal goodwill, liquidity discounts and the reference date. See also: Valuation Premiums and Discounts.

10. Annexes

The annexes constitute the report's documentary foundation. They must include: the exhaustive list of documents received; detailed calculations for each method; sourced market data (with extraction dates); comparables used (transactions and/or listed companies); the valuer's CV and qualifications; and in France, the formal declaration of impartiality.

Defending the Valuation: Against the Opposing Expert, the Court and in Arbitration

Defending the valuation is often the most delicate phase of the engagement. The expert who has never faced an experienced opposing expert or a court challenging their conclusions is at serious risk. Preparation is decisive.

The Five Classic Attacks by the Opposing Expert

Attack 1: The Reference Date

The opposing expert will often choose a different date — generally the one most favourable to their client. The defence rests on a solid legal argument (art. 214 CC in Switzerland, Court of Cassation case law in France) and on demonstrating that the date retained is as close as possible to the effective liquidation.

Attack 2: The Choice of Methods

The opposing expert may challenge the weight accorded to each method — notably if one of them produces a value significantly different from the others. The defence rests on the internal consistency of the report and the justification of the approach taken by reference to sector practice and applicable valuation standards.

Attack 3: The Discount Rate or Multiple

The WACC or capitalisation rate is often the preferred point of attack, since a 1-point variation can change the value by 15–20%. The defence rests on the traceability of sources (Damodaran, comparable transactions, market data) and on the consistency between the rate and the documented risk profile of the company. See also: Specific Risk Premium (SCRP) and Size Premium.

Attack 4: Contested Adjustments

The opposing expert will systematically contest adjustments favourable to their client — notably the add-back of benefits in kind or the personal goodwill discount. The defence rests on the quality of the documentation: lease contracts, payslips, bank statements, replacement quotes, sector salary benchmarks.

Attack 5: The Valuer's Competence

In contentious proceedings, the opposing expert may challenge the qualifications of the valuer — particularly in France if they are not registered on an official Court of Appeal list. The defence rests on the CV, references for comparable engagements and any relevant certifications (SEC, CEFA, CFA).

Before the Judge: The Right Register

The judge is not a financial professional. Their objective is not to understand the subtleties of the WACC or the CRR tree — it is to settle a patrimonial dispute between two spouses. The valuer appearing before a court must:

• Speak in terms of economic consequences, not mathematical formulae
• Systematically illustrate with concrete examples ("if Mr X replaces Mrs X with an external accountant, this costs k per year, i.e. k× on a multiple of 5")
• Acknowledge the limitations of the valuation — this reinforces credibility, not the reverse
• Never take sides on the non-financial aspects of the divorce
• Answer precisely the questions posed — no more, no less

The Concept of Gross Error: When a Valuation Can Be Annulled

In French law, the Court of Cassation admits that a valuation by an expert appointed under Art. 1843-4 can be annulled for gross error — but this concept is interpreted strictly. A methodological error or parameter error, even significant, does not necessarily constitute a gross error. However, a valuation date manifestly incompatible with applicable texts, or a deliberate refusal to apply contractual valuation rules, may constitute one.

In Swiss law, the principle of free assessment of evidence (art. 157 CPC) allows the court to depart from the expert's conclusions if it considers them insufficiently reasoned or contradictory. A private expert report can be submitted alongside or in opposition to the judicial expert's report, with evidentiary weight freely assessed by the court.

Quantified Case Studies

The following two cases are pedagogical illustrations based on representative situations encountered in Hectelion's practice. Names, sectors and numerical data have been modified to preserve the confidentiality of our mandates.

Case 1 (Switzerland — Vaud): Family SME — Spouses X — Company A Ltd (Construction)

Situation:

‍Mr and Mrs X (fictitious names) are married under the Swiss default legal regime of participation in accrued gains. They are both shareholders of Company A Ltd (fictitious name), a construction SME based in the Lausanne area, Mr X holding 70% and Mrs X 30%. The company was incorporated during the marriage with accrued-gains funds. Mr X is full-time CEO; Mrs X handles bookkeeping and billing on a half-time basis, without formal remuneration.

Revenue: CHF 2.4 million.

Accounting EBITDA: CHF 280k.

Key valuation issues:

• Classification of interests: 100% of the shares are accrued gains (incorporated during the marriage with accrued-gains funds).
• Remuneration of Mr X: the market salary for the CEO of a CHF 2.4m construction SME in Lausanne is estimated at CHF 110k–130k — a gap of CHF 40k to be adjusted.
• Replacement of Mrs X: her part-time accounting/billing role represents an estimated replacement cost of CHF 35k p.a.

The table below presents the equity value of Company A under three complementary methods.

The practitioners’ method is the primary reference under Swiss law. The 2024 CSI rate (Circular No. 28) is 8.75% — a standardized rate that may differ from actual effective tax levels.

Case 2 (France — Paris): SME SAS — Divorce of Spouses Z. Court-appointed expert under Art. 1843-4

Situation:

‍Mr and Mrs Z (fictitious names) are married under the default French community of accrued gains regime. Mr Z is CEO and sole shareholder of Company C SAS (fictitious name), an IT services company, with revenue of €1.8m.

The company was incorporated during the marriage with community funds. The President of the Paris Judicial Court appoints Hectelion as expert to determine the value of the equity interests in Company C SAS pursuant to Article 1843-4 of the French Civil Code.

Key valuation issues:

• All shares are community property (company incorporated during the marriage with community funds).
• Mr Z's salary overstated: €150k p.a. for an IT services company with €1.8m revenue — market rate: €100–110k.
• Vehicle used for mixed professional/private purposes — partial add-back.
• Personal subscriptions and representation expenses.
• Latent capital gain on the shares: deferred tax at the 30% PFU flat tax rate (art. 200 A CGI).

‍Defence before the JAF: The opposing expert, instructed by Mr. Z, retained a value of €850k, based on the following arguments: (1) non-application of a personal goodwill discount, (2) use of a 14% discount rate (vs. 11.5% for Hectelion), and (3) rejection of the add-back of benefits in kind. Hectelion maintained its conclusions by documenting each adjustment with vehicle lease agreements, fuel account statements, compensation benchmarks published by IT services industry associations, and case law relating to the personal goodwill discount. The court ultimately retained a value of €1,050k — between the two expert opinions.

CEO Message

Business valuation in a divorce context is the most demanding engagement a firm like ours can accept. Not because the methods are different — they are the same as for any other valuation engagement. But because every figure you set down can significantly alter someone's financial future — and will be examined under a microscope by lawyers, a judge and an opposing expert whose goal is to find the flaw.

At Hectelion, we have made the choice to intervene in these proceedings with the same level of rigour as for an acquisition due diligence: full traceability of sources, adjustments documented line by line, systematic sensitivity analysis, a report structured to withstand ten years of proceedings if necessary. It is demanding. It is sometimes uncomfortable in a difficult human context. But it is the only acceptable standard for a firm that values its reputation and the service it renders to justice.

Our France and Switzerland experience has taught us one thing: the lawyers and notaries who mandate us come back. Because a solid report — even if it does not produce the figure their client hoped for — is a protection for everyone. And a defensible valuation is worth more than a fragile one that collapses at hearing.

Aristide Ruot, Ph.D — Founder & Managing Director, Hectelion

Conclusion: The Independent Valuer — An Indispensable Actor in the Entrepreneurial Divorce

The valuation of a business in a divorce context is far more than a technical exercise. It is an engagement at the intersection of matrimonial law, corporate law, taxation and corporate finance — requiring multidisciplinary expertise, methodological rigour and the ability to defend conclusions in a contentious environment.

In Switzerland, the freedom conferred on magistrates by Article 183 CPC in the choice of expert — without a binding mandatory list — is an opportunity for lawyers and notaries who wish to mandate a firm genuinely specialised in corporate finance and M&A, rather than a generalist. In France, the framework of Article 1843-4 of the Civil Code offers a robust but demanding mechanism, which presupposes confirmed technical and legal mastery.

At Hectelion, an independent advisory firm based in Mont-sur-Lausanne, active across France and Switzerland, our practice of business valuation in the context of divorce proceedings has been built on the trust extended to us by lawyers, notaries and Swiss cantonal courts. We also cover related engagements: financial due diligence, intangible asset valuation, and financial structuring.

If you are a lawyer or notary facing a divorce case involving a business or holding company, we are available for a first, confidential analysis of the engagement.

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Author

Aristide Ruot, Ph.D.
Founder & Managing Director