Spouses married under the participation in acquisitions regime (participation aux acquêts, a French matrimonial regime that works like separation of property during the marriage and shares the net gains in value on dissolution) divorce. The wife, a pharmacist, owned her pharmacy before the marriage and developed it over twenty years through her work. The husband contends that this added value must enter the computation of the participation claim; the Grenoble court of appeal replies that, as under the community regime where a spouse’s own work on separate property gives rise to no compensation, added value due to the spouse’s work does not count, and sets the value of the pharmacy as identical in the original estate and in the final estate. The Cour de cassation (the French supreme court for civil matters), on 13 December 2023, in a reported decision, quashed: original assets are valued “according to their condition at the date of the marriage” and existing assets “according to their condition at the date of dissolution”, all at the value at the date of liquidation; “where the condition of an asset has been improved, even through the personal work of a spouse”, the added value so measured “increases the net acquisitions of the owning spouse”. For the valuer, the assignment involves two valuations of the same business, in two conditions, at a single date.
The facts
A judgment of 26 September 2008 pronounces the divorce of spouses married under the participation in acquisitions regime. Difficulties arise in the liquidation of the participation claim. The wife holds a pharmacy, an original asset, and shares in a property company that owns the building let to the pharmacy. After a first quashing in 2019, the Grenoble court of appeal, on 17 November 2020, holds that the value of the property company shares and that of the pharmacy will be identical in the wife’s original estate and in her final estate.
For the pharmacy, the court finds that its added value results from the wife’s activity during the marriage and not from fortuitous economic circumstances or investment of funds, and that added value resulting from a spouse’s personal work is not taken into account in computing the participation claim, as under the community regime where it gives rise to no compensation. For the company shares, it notes that the husband substantiates neither the nature nor the extent of the alleged investments in the building. The husband appealed.
The decision
The first civil chamber dismissed the appeal as regards the company shares: the court of appeal found, within its discretion, that the husband did not show investments exceeding what was necessary to maintain the activity and increasing the value of the building, so that the value of the shares was the same at both dates. It quashed, however, as regards the pharmacy, under articles 1569, 1571 and 1574 of the Civil Code (Cass. 1re civ., 13 December 2023, no. 21-25.554, reported).
“The assets comprised in the original estate as in the final estate are valued at the date of liquidation of the matrimonial regime, according to their condition at the date of the marriage or acquisition for original assets and according to their condition at the date of dissolution of the regime for assets existing at that date. It follows that where the condition of an asset has been improved, even through the personal work of a spouse, it must be valued, in the original estate, in its initial condition and, in the final estate, according to its condition at the date of dissolution of the regime, taking into account the improvements made, the added value so measured increasing the net acquisitions of the owning spouse.” The court of appeal, which had found that the wife had improved the condition of the asset through her personal work, breached those provisions. The case is sent back to the Lyon court of appeal.
What this changes for valuation
Two conditions, one date. Participation in acquisitions works by a double estimate: the original estate, what the spouse had at the date of the marriage, and the final estate, what the spouse has at the date of dissolution. Both are valued at the value at the date of liquidation, but each in its own condition. For a business, the initial condition is that of the pharmacy at the date of the marriage, turnover, clientele, location, equipment, fittings; the final condition is that at the date of dissolution, after twenty years of operation. The valuer values both conditions with the methods of the date of liquidation, percentage of turnover, multiple of gross operating surplus, comparison, and the difference is the added value that enters the acquisitions. The guide on the divorce of a business owner describes that assignment.
The spouse’s work creates an acquisition. The court of appeal had reasoned by analogy with the community regime, where separate property improved by the spouse’s work gives rise to no compensation. The Cour de cassation refuses the transposition: under participation in acquisitions, any enrichment between the two dates, whatever its cause, work, investment or market, is an acquisition to be shared in value. The valuer therefore does not have to distinguish the origin of the added value; he measures the gap in condition, and the judge derives the claim. It is an important methodological difference from the liquidation of a community regime, where the origin of the added value drives the compensation.
Reconstituting the initial condition twenty years later. The condition of the pharmacy at the date of the marriage is reconstituted from the accounts of the time, the deed of acquisition, the leases, the inventories, the turnover and the margin of that time, then valued with the coefficients and the market of the date of liquidation, as if that pharmacy were sold today. The report explains what it retrieved, what it estimated, and gives a range where the archives are thin, because the gap between the two conditions is what will be debated.
Company shares, by contrast, move only if the building has changed. The Court approves the court of appeal on the property company shares: without investment beyond necessary maintenance, the condition of the building has not changed, and the value of the shares is the same at both dates. This shows that market added value alone, without a change in condition, creates no gap between original and final estate, since both are valued at the same date; it is the change in condition, works or development, that counts. For the building as for the business, the valuer documents what was done between the two dates, with invoices and accounts, before valuing.
The business and its premises, two linked valuations. A pharmacy and the company holding its premises are valued together but separately: the rent paid by one is income for the other, and an off-market rent shifts value from the business to the premises or the reverse. The report checks the consistency of the rent with the rental value, so that the added value is allocated to the right estate; the article on the sale of shares and the expert’s role recalls the methods applicable to shares.
What the valuer takes from it
- Under participation in acquisitions, original and existing assets are all valued at the date of liquidation, but each in its condition, at the marriage or at dissolution.
- Added value due to the owning spouse’s work enters the acquisitions; the analogy with compensation under the community regime is rejected.
- The valuer values the business in its initial condition and in its final condition with the methods and the market of the date of liquidation.
- Without a change in the condition of the building, property company shares have the same value at both dates.
- The report documents what changed between the two dates, with invoices and accounts, and checks the consistency between the business and its premises.
Further reading
The Business and company shares page describes the assignment, its timescale and its fee. The guide Divorce of a business owner: business and shares and the glossary entries fonds de commerce, récompense and date de valeur complement this article. On the same theme: Divorce in France: when to value the house, who pays the expert and Share sale price in France: the expert follows the protocol. The decision is available on Légifrance.
What next
A divorce under participation in acquisitions, a pharmacy, a practice or shares held before the marriage, and a participation claim to quantify?
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