Expert witness support in high-stakes divorce proceedings

Overview

The client was a founder and major shareholder of a UK-listed small-cap company, with a substantial personal equity stake built up over the course of his executive career. Facing matrimonial proceedings, his legal team required an independent expert to address a critical valuation question: whether it was reasonable to use the prevailing share price to value his shareholding, or whether a material discount should be applied to reflect the practical realities of disposing of such a holding in the open market.

Hardman was engaged to produce a rigorous, evidence-based expert witness report. This covered the liquidity profile of the stock, the likely discount to market price that any disposal would require, the practical mechanics and realistic timescale of a sale, the applicable brokerage costs, and the implications of transferring a portion of the stake to the other party. The report was required within a matter of weeks, with a court deadline driving the timetable.

What distinguished Hardman’s contribution was not simply the delivery of a professional opinion. It was the construction of a bespoke, data-driven analysis, built from tens of thousands of comparable director share transactions, distilled into a focused, court-ready body of evidence designed to withstand challenge from the opposing side.

Challenge & Process

What the Client Was Trying to Achieve

The client’s legal team needed to establish, with credible evidential weight, that the prevailing share price could not simply be taken as a proxy for the realisable value of his shareholding. His stake was large relative to the stock’s typical daily trading volumes. Any attempt to sell or transfer a meaningful portion of it would, in practice, move the market against him, depressing the very price being used as the reference point.

The legal team came with a precise set of questions: whether a discount to market price would arise on an open-market disposal; what the size of that discount might be; how long a phased sale would realistically take; what brokerage costs would be involved; and what the consequences would be if a portion of the shareholding were transferred to the other party. Critically, they did not want opinion alone: they required the report to be grounded in external, verifiable evidence wherever possible.

Why They Chose Hardman

The instruction came via a trusted introduction from a respected figure in the capital markets with direct, long-standing knowledge of Hardman’s analytical capability. He understood that this engagement would demand something considerably more rigorous than a standard market practitioner’s view.

The lawyers were explicit from the outset: they did not want an experienced broker saying ‘in my view, the discount would be around 5-10%.’ They wanted evidence that could withstand cross-examination. That combination of deep capital markets expertise and analytical discipline is precisely what Hardman was positioned to provide.

Approach & Key Stages

The project moved through several distinct phases:

• Initial briefing and scoping. Following a preliminary call, the legal team issued a formal set of instructions and supporting documentation setting out the specific questions to be addressed and the deadline for delivery.
• Background research and document review. Hardman reviewed the relevant company documentation in detail: covering the corporate structure, the client’s shareholding and option arrangements, his professional standing, and the degree to which investor confidence in the business was connected to him personally rather than its underlying assets.
• Sense-checking with the market. Rather than relying solely on an internal view, Hardman drew on its network of active capital markets practitioners: individuals with current, hands-on experience of handling this type of transaction, to sense-check its initial conclusions on the likely discount range. Contacts were approached with the relevant facts and asked for their independent assessment. Their responses were consistent, corroborating the view that a discount would be required and falling within a comparable range.
• Bespoke database construction. This was the most significant and distinctive element of the work. Because no single data source captured all the relevant variables: seller identity, transaction size as a percentage of the company, transaction price, and the prevailing market price at the time, Hardman worked with a specialist financial data provider to draw on multiple pools of data and combine them into a bespoke dataset. Tens of thousands of director share transactions were collected, progressively filtered by transaction type, seller profile, and holding size, and distilled down to a small number of genuinely comparable precedents.
• Liquidity and investor profile analysis. Hardman analysed the stock’s trading history to establish how long a phased disposal would realistically take without materially moving the price, and reviewed shareholder movements over time to illustrate the illiquidity of the register. Separately, Hardman gathered evidence: including from publicly accessible investor forums, demonstrating that the client’s personal track record and reputation were material factors in the investment case, adding a further dimension to the discount argument.
• Report drafting and iteration. A detailed report was produced and submitted to the legal team. The lawyers reviewed it closely, requesting clarification and expanded evidential support on numerous points: covering the mechanics of placing shares in smaller listed companies, the broader regulatory environment for illiquid holdings, and the implications of the client’s obligations under market abuse rules. Each round of queries was addressed with additional data and supporting evidence, strengthening the overall document.

Challenges Encountered

The primary challenge was time. The formal instruction was received with only 2 weeks until the delivery deadline, during which Hardman’s lead analyst was also committed to other obligations. The full scope of work: research, data construction, drafting, and multiple rounds of legal review, was completed within the required timeframe without compromising the quality or depth of the analysis.

The data challenge was equally demanding. No pre-built database existed with the granularity required. Constructing one meant knowing which data sources to draw on, understanding how to combine them meaningfully, and applying the judgement to filter a very large raw dataset down to a small number of genuinely relevant comparators, while being able to explain and defend every step of that process to a legal audience with no background in capital markets.

Resolution

Hardman delivered a comprehensive, evidence-based expert witness report addressing each of the legal team’s questions through a combination of professional opinion, independently gathered market practitioner testimony, and a body of transactional data that had been specifically assembled for the purpose.

The key conclusions reached were:

• A discount to the prevailing share price would be required on any open-market disposal of the client’s stake, consistent with standard market practice and supported by comparable transaction evidence.
• Analysis of comparable precedent transactions, where a significant shareholder in a company of similar characteristics had disposed of a meaningful stake, indicated a wide range of achievable discounts, with the specific circumstances of this case placing it towards the upper end of that range.
• A phased disposal via the market would take an extended period to execute without materially moving the price, and even then, market participants would likely recognise the pattern of selling and adjust their pricing accordingly.
• Transferring a portion of the stake to the other party would introduce additional complications: the transferee would not be subject to the same regulatory constraints on dealing as the client, the perception of a potential seller in the market could itself depress the share price, and the loss of a major aligned shareholder would likely be viewed negatively by investors.

The value Hardman provided extended well beyond the report itself. What the legal team received was a body of evidence, built from primary data, independent practitioner testimony, and forensic analysis of comparable transactions that was specifically constructed to withstand challenge in court. Where the opposing side was likely to rely on practitioner opinion unsupported by comparable data, Hardman’s analysis could be interrogated transaction by transaction.

Where Hardman Provided Most Value

Three things distinguished Hardman’s contribution on this engagement:

• Going beyond opinion to evidence. The instinct to ask whether data exists that can support a conclusion, and the capability to source, construct, and interpret that data, is not something a typical market commentator brings to a legal instruction. It is central to how Hardman approaches complex analytical problems.
• Network and market relationships. Long-standing relationships across the investment community allowed Hardman to gather primary market opinion quickly and credibly, adding genuine evidential weight rather than simply another professional view.
• Translating complexity for a non-specialist audience. Communicating intricate market mechanics, the dynamics of placing illiquid holdings, the post-Woodford regulatory environment, the implications of market abuse obligations, in language that a legal team and a court could follow precisely was as important as the underlying analysis. The rigour of the lawyers’ review process ultimately produced a stronger, more court-ready document.