Growth in Business Value
Some companies grow, some do not. Some grow fast, some grow slow. In the course of growth, there are uncountable factors that may have contributed to the growth in business value, passively or actively.
In an earlier article, we mentioned a particularly interesting SJE valuation assignment in which we were instructed to determine the growth in value from the date of marriage to the date of petition for divorce, and measure the force of “active” and “passive” factors which contributed to such growth.
In the recent English case of WM v HM  EWFC 25, the Hon. Mr Justice Mostyn ruled on both of these issues as follows:
Approach to historical valuation of a business
In WM v HM  EWFC 25, Mostyn J determined the non-matrimonial part of a business value by evaluating its historical value some 30 years prior, when the parties started cohabitating. He preferred the following two time-based approaches to work back the business value retrospectively:-
1. Linear time apportionment, which assumes the business value increased in equal proportions over the years.
2. Discount the current value by 5% which represents “natural value of money.
Mostyn J rejected the exponential growth and stated that:-
The chart (below) was illustrated in his judgment.
On this basis, he found that
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