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How to value shares in investment company?

I've been asked to value a minority holding for IHT purposes

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An investment company consists of £1m investment property and £2m listed investments.

I've been asked to perform a valuation of 24% of the ordinary share capital and 33% of the 'A' shares which are non voting but rank equally in all other respects. This is for probate/IHT purposes.

I am proposing to use the net assets basis. Do readers agree? What are readers opinions on a minority discount?

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By Kevin Kavanagh
26th Jun 2019 10:25

You're dealing with a company holding £3M of assets. Any valuation therefore is likely to be a significant figure. If you're not comfortable taking on the task you would be very wise to pass it over to someone more qualified/experienced in such a specialist area. Relying on comments on a free forum looks like a high risk move.

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By Accountant A
26th Jun 2019 10:51

Does your PI cover you for valuations and does it impose any conditions to what you can do?

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By johngroganjga
27th Jun 2019 12:46

Yes the net assets basis is the one to use for the valuation of the whole company. Remember to deduct the contingent tax liabilities on the sale of the assets at their current market values.

I am not sure what other basis you were considering.

As to minority discount, suffice it to say that it should be significantly less than the discount for the same percentage in an active trading company.

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Replying to johngroganjga:
By Wilson Philips
27th Jun 2019 22:12

I agree, although it is uncommon to reflect the full amount of the latent tax charge - 50% is usual.

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Replying to sash100:
By Wilson Philips
27th Jun 2019 22:10

Except that relates to trading companies.

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By alltaxedout
28th Jun 2019 15:38

Thanks folks. All very helpful. I agree with not putting in the full contingent tax liability.

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