IVS 102: Understanding Bases of Value in Family Law Business Valuations
- DB Forensic
- Mar 18
- 3 min read
Updated: Apr 15
When a marriage or de facto relationship breaks down, dividing assets can quickly become complex. This is especially true when one or both parties own a business. Determining what that business is worth is rarely straightforward. A key issue is not only how the business is valued, but what definition of value is being used.
This is where IVS 102 Bases of Value becomes important. The International Valuation Standards explain that the “basis of value” sets the foundation for how a valuation is prepared. It determines the assumptions, methods, and ultimately the value conclusion.
In family law disputes, selecting the correct basis of value can significantly influence the outcome of a property settlement.
Understanding “Bases of Value”
A basis of value describes the fundamental assumptions behind a valuation. It defines the perspective from which the asset is being assessed and the conditions assumed in the hypothetical transaction.
Different bases of value may produce very different results.
Some of the most common bases of value include:
Market Value
This is typically the most recognised valuation basis. It represents the price that would be achieved in a transaction between willing and informed buyers and sellers in an open market.
Equitable Value
Equitable value considers fairness between specific parties. In disputes such as shareholder disagreements or family law matters, the value between particular parties may differ from the wider market price.
Investment Value
This reflects the value of a business to a particular owner or investor based on their individual objectives or circumstances. It is entity specific rather than market based.
Liquidation Value
This represents the amount that could be realised if the business or assets were sold under liquidation conditions, either in an orderly sale or under pressure.
Choosing the correct basis of value is critical because it directly affects the valuation methods, assumptions, and final outcome.
Why This Matters in Family Law
In Australian family law property settlements, the court aims to divide assets fairly between parties. When a privately owned business is involved, the chosen basis of value becomes extremely important.
For example, a business might have:
One value if sold on the open market
Another value to the current owner who continues operating it
A much lower value if forced to sell quickly
If the wrong basis of value is applied, the valuation may not reflect the true economic reality of the situation. This can lead to disputes between the parties, delays in settlement, or challenges to the expert report.
IVS 102 helps ensure that the basis of value is clearly defined and appropriate for the purpose of the valuation. This transparency allows lawyers, courts, and both parties to understand exactly what assumptions the valuation is based on.
The Role of Forensic Accounting
In family law matters, forensic accountants play a critical role in applying valuation standards correctly.
At DB Forensic, our experts carefully assess the circumstances of each case before selecting the appropriate basis of value. This includes considering:
The purpose of the valuation
Whether the business will continue operating
The interests being valued
Any legal or court requirements
We then clearly explain the basis of value used and how it affects the valuation outcome. This ensures the valuation is transparent, defensible, and aligned with professional valuation standards.
For family lawyers and separating couples, this clarity is essential when negotiating settlements or presenting expert evidence to the court.
Need Clarity on the Value of a Business in a Property Settlement?
Business valuations in family law disputes require careful judgment and adherence to recognised valuation standards. Understanding the correct basis of value can make a significant difference to the final outcome.
DB Forensic provides independent, expert business valuations that comply with International Valuation Standards and are tailored to family law proceedings.
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