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Domestic Relations – Equitable Distribution – Family Business – Separate & Marital Property – Valuation – Parent & Child – Support

Where the wife’s 25-percent interest in the family business gave her no control over the company, the value of her shares was subject to a minority or lack-of-control discount.

Nevertheless, we reverse the trial court’s valuation of the wife’s 25-percent interest because no marketability discount should have been applied. Otherwise, we affirm.

At the time of the parties’ separation, the plaintiff-husband owned 75 percent of the stock in his family’s business, Pure Country, Inc. (PCI), and the defendant-wife owned 25 percent of PCI’s stock. The wife claimed that all of PCI was marital property, but the trial court found that the husband’s 75 percent stake was his separate property.

Separate Property

After the husband’s mother died, his siblings sued him and his father. This explains why the father then made a gift of the father’s 75-percent ownership of PCI to the husband.

After the father’s gift, the wife asked for part ownership of PCI. The husband, who had previously bought his sister’s 25-percent stake in PCI, transferred the 25-percent interest to the wife. Upon receipt of this 25 percent interest, the wife acknowledged that she had no further right to the business. This transaction makes no sense if the wife believed PCI was marital property.

Considering the transfer of 25 percent of PCI stock to the wife, and considering the father’s compelling reason for making a gift to the husband, the husband’s testimony was sufficient to prove the husband’s 75 percent interest in PCI was not marital property.


The husband’s expert’s valuation of PCI as a whole was more thorough, better reasoned, and more credible that the wife’s expert’s valuation.

However, in valuing the wife’s 25 percent interest in PCI, the husband’s expert applied a 35 percent marketability discount. After the family court’s ruling in the instant case, Moore v. Moore, 414 S.C. 490, 779 S.E.2d 533 (2015), held a marketability discount inapplicable when one spouse retained ownership of the business. Since the husband has no plans to sell PCI, the marketability discount was improper under the facts of this case.

The husband’s expert also discounted the value of the wife’s interest because of her lack of control of the business. The wife contents that it would be fairer to value PCI as a whole and award the shares their pro rata value without any discount. But in the realm of equitable division in our state, we are bound by the standard of “fair market value” rather than “fair value.”

We hold a minority or lack of control discount may be considered when valuing a minority interest in a closely held business as part of the equitable division of the marital estate. We find the discount appropriate here because a holder of the wife’s 25-percent interest would have no control over the company. Although the husband is retaining the wife’s interest under the family court’s order, fair market value assumes a hypothetical sale between a willing buyer and a willing seller. The husband is already the controlling shareholder, so obtaining the wife’s 25-percent interest does not augment his control.

Because the wife’s minority interest is worth less than a pro-rata share of the company as a whole, it was proper to discount the value, as the market surely would. Nevertheless, we find an effective 44-percent minority discount – as calculated by the husband’s expert – excessive. We find a 30-percent minority discount proper, which the expert acknowledged would be more in line with market ranges.

Applying a 30-percent minority discount results in a $132,656 value for the wife’s interest

Child Support

Although the wife argues that the husband underreported his income on his financial declaration, the wife did not present any documentary evidence in support of her argument, and her expert’s testimony was excluded because the wife did not produce the expert’s report within the discovery deadline.

The wife does not offer any evidence of how the child support guidelines amount is unjust or inappropriate. She does not point to any expenses or outstanding needs of the parties’ child that she will be unable to cover. The wife did not prove any statutory factors or present any evidence warranting a deviation. See S.C. Code Ann. § 63-17-470(C).

We therefore affirm the family court’s child support order.

Affirmed in part and reversed in part.

Clark v. Clark (Lawyers Weekly No. 011-101-18, 11 pp.) (D. Garrison Hill, J.) Appealed from the Family Court in Greenville County (Harry Phillips, J.) Ken Lester, Catherine Hendrix and David Michael Collins for appellant; David Alan Wilson for respondent. S.C. App.

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