When shareholders fall out, the fight is about the number — and only an independent one ends it.

Business partnerships end for all sorts of reasons: a partner wants to retire, two founders no longer share a direction, a shareholder is being bought out, or a working relationship has simply broken down. Whatever the cause, almost every partner dispute and buy-out comes down to a single question that is far harder to answer than it looks: what is the leaving party’s stake actually worth?

It is the one number neither side can produce on its own and have the other believe. And until it is settled, nothing else can be.

Same business, opposite incentives

The problem is structural. The shareholder leaving wants the value high — it is what they will be paid for their shares. The shareholders staying want it low — it is what they will have to find to buy those shares out. Same business, same financial statements, two numbers pulling hard in opposite directions, each side convinced the other’s figure is self-serving.

Often both produce a number. The departing partner’s looks optimistic; the remaining partners’ looks mean. Neither trusts the other, so neither figure settles anything — it just becomes ammunition. The dispute hardens, positions entrench, and what should have been a clean transaction starts heading towards lawyers and, eventually, court.

What the shareholders’ agreement does — and doesn’t — solve

A well-drafted shareholders’ agreement should anticipate this and set out how a departing shareholder’s stake is to be valued. Interpreting that agreement is your attorney’s job, not mine. But from the valuation side, a few patterns recur.

Sometimes the agreement names a clean mechanism — an independent valuer, on a defined basis of value — and the path is straightforward. Often, though, the agreement is silent, or it specifies a formula that has quietly become a problem: “net asset value”, which can badly undervalue a profitable business whose worth lies in its earnings rather than its equipment; or a fixed multiple agreed years ago that no longer reflects reality. Where the agreement is unclear, absent, or produces an obviously unfair result, the value has to be established properly and independently — and that is where an objective valuation, defensible to both sides, becomes the thing that breaks the deadlock.

The basis of value is not a technicality

One distinction matters more in disputes than almost anywhere else: the basis of value. Open-market value — what a willing buyer would pay a willing seller — is not always the right basis for a shareholder exit. In many dispute and statutory contexts, the appropriate basis is fair value, which can be assessed differently, particularly in how it treats a minority holding.

This is not hair-splitting. The basis chosen can move the answer materially, and an experienced valuer establishes the correct one up front — ideally in step with the attorneys — rather than producing a number and discovering later it was built on the wrong foundation. South African law, through the Companies Act, gives certain shareholders the right to a fair value for their shares in defined circumstances; where those apply, the legal trigger is the attorney’s terrain, but the independent determination of fair value is the valuer’s.

Minority interests and the discount question

Where the departing shareholder holds a minority stake, the contested question is almost always whether — and how much of — a discount applies. A minority holding can be worth less than its simple proportion of the whole, because a minority shareholder cannot control the business, and because the shares may be hard to sell. These are the discount for lack of control and the discount for lack of marketability.

But whether a discount is appropriate at all depends heavily on the context and the basis of value: in some fair-value and statutory settings a minority discount is not appropriate, while in an open-market sale of a minority parcel it clearly is. Getting this right, and being able to defend it, is exactly the kind of judgement that decides the outcome — and exactly what an opposing expert will test.

Normalising what the controlling side has done

In a dispute, the departing party will also want the earnings normalised, and often with reason. Where one side controls the business, profits can be suppressed or value extracted in ways that depress an earnings-based valuation — an inflated owner’s salary, family on the payroll, personal costs run through the company, related-party transactions on soft terms. A defensible valuation adjusts these back to a fair, market-related basis and documents every adjustment, so that the value reflects the business’s true earning power rather than how the controlling shareholder chose to run it.

The one thing both sides can use

What ends a shareholder dispute is not a better argument. It is an independent number that neither side produced and both can defend — an opinion from a valuer who is not your expert and not theirs, with no stake in whether the figure lands high or low.

That is the role I am built for. Acting as the independent third party, I produce one objective, fully documented value that both shareholders and their attorneys can work from. Because it is not aligned to either side, it can do what neither party’s own figure ever could: become the basis of a settlement.

The honest version — and why early matters

A shareholder dispute that runs its full course through litigation is slow, expensive, and corrosive: while it drags on, the uncertainty itself damages the business both sides are fighting over. An independent valuation obtained early — before positions calcify — is almost always faster and dramatically cheaper than the alternative, and it routinely prevents a legal process that costs many times what the valuation would have.

If you are a shareholder facing a buy-out or a deadlock, or an attorney acting in a shareholder dispute, the starting point is a credible, independent value both sides can stand behind. Send me the details of the situation — the first conversation is free, and there is no obligation either way.