Valuation

Getting good advice can ensure you receive what you’re entitled to when leaving a partnership.

There is no general right to simply ‘retire’ from a general or limited partnership, unless there is a provision relating to this in a partnership agreement. This means the mechanism for valuing a partner’s interest when they retire will generally be covered by the terms of such an agreement.

A partner’s entitlement will often include:

• Their profit share up to their end date.
• The outstanding balance of their current and capital accounts.
• A share of the value of the partnership assets.

The partnership agreement will also often include a mechanism for determining the price to be paid for the partner’s interest, unless it can be agreed.

When it comes to Limited Liability Partnerships (LLP), the law is vague. A well drafted LLP agreement will therefore usually set out the financial consequences of a member's retirement. These often state that an outgoing member's share in the LLP will be transferred to the remaining members, with the outgoing member being paid out on a similar basis to that set out above.

Disputes over the valuation of an outgoing partner’s interest can be technical and hard-fought. They require a detailed understanding of the law and how the terms of partnership agreements apply in practice. We have the specialist knowledge needed to help you to get the right valuation, helping you to identify and instruct an appropriate expert accountant to act on your behalf where necessary.