The valuation of business interests can be critical to resolving financial settlements on divorce.

We are well-versed in presenting expert evidence on business valuation issues to the parties, their advisers and the Court in a robust and readily understandable manner.  Our valuation conclusions are supported by reference to the underlying financial metrics of the business and, where relevant, empirical data from comparator businesses or transactions.  Our cost-efficient approach means we are equally capable of valuing small owner-managed businesses and international conglomerates.  

As well as acting as a Single Joint Expert, where we act independently of the parties to the matrimonial dispute, we are often asked to act “shadow expert”.  In this role, we provide various types of accounting advice, including seeking to identify hidden or understated assets, assistance drafting document requests and questionnaires, helping assess the robustness of the conclusions formed by other accounting experts and advising on questions to be put to those experts.

When acting as Single Joint Expert, and in addition to assessing the value of a business, we are frequently also instructed to address issues of liquidity, tax-efficient means to extract cash from a business, and the sustainable income that a business can generate going forward.  We are able to advise on the CGT implications on the sale of a business or shares in that business.  Where tax matters become more complicated we work closely with a specialist tax consultant with whom we have worked on many assignments previously.

Acting as single joint expert to assess the value and liquidity of a chain of children’s day nurseries based in the North of England.  Issues were complicated by the differing accounting treatments applied between the management and statutory accounts of the various entities within the group.  There were also a number of allegations made relating to personal expenditure passing through the accounts of the business.  In order to arrive at our valuation, we identified and adjusted for this personal expenditure, and also took account of changes in the nursery sector more generally – including government-backed free child places, and the impact of minimum wage and pension obligations on the profitability of individual sites.

Acting as single joint expert to assess the value of a retail furniture business.  The husband’s principal business ceased trading before the parties separated, albeit it re-emerged as two “phoenix” businesses under a different capital and shareholding structure.  There were also allegations that the husband’s business associates was holding shares on his behalf.

Researching and cataloguing the assets of a property developer, who had hidden and disseminated assets over a number of years leading up to divorce.  This exercise involved reviewing electronic records from the husband's computer, and the property assets were held across a number of jurisdictions.

Analysing the bank statements of a divorcing husband and wife, in order to determine the pattern of their respective expenditure over a period of time and assist in the assessment of “financial needs”.

Using forensic analysis, innovative thinking, specialist and investigative training and, if required, state of the art computer forensic tools provided by a reliable high profile business partner, we are able to provide an outstanding investigative service.

We provide practical strategies and advice designed to limit the impact of an incident, and identify the range of likely outcomes and the critical success factors which will ultimately determine recoverability.

We have significant experience of working with clients to identify how a “black hole” has arisen, whilst minimising disruption to the company and ensuring that financial and commercial considerations are taken into account. In these circumstances, we have provided advice as to any potential negligence claims against auditors or other advisors. Furthermore, as either a proactive or reactive assignment we also have experience of advising clients on the implementation of systems and changes in control procedures to offer improved protection against fraud.

Our recent experience includes investigating and reporting on claims for:

• procurement fraud;
• employee expenses fraud;
• accounting “black holes”;
• allegations of fraudulent or unlawful trading;
• inappropriate diversion of trade; and
• financial motive following insurance claims.

Acting on behalf of a global e-commerce retailer to investigate an alleged fraud by two of its registered vendors.  Based on analytical review and cross-referencing of thousands of transaction records, we were able to demonstrate trends indicative of fraudulent activity (essentially, sales recorded with no goods being shipped).  Our analyses formed the basis of the client’s private prosecution against those vendors.

Acting for pharmacy in bringing claim against former accountants in respect of fraud committed by an employee of the accountancy practice who had siphoned money out of the pharmacy business

Investigating allegation of embezzlement by the managing director of a leading UK medical research charity.

Business valuations often form the crux of a contentious dispute, including the following:

• shareholder and partnership disputes, where one party is seeing to buy-out the other, or in circumstances where a minority shareholder is claiming unfair prejudice;
• compulsory purchase order compensation claims, where the business affected has been extinguished;
• post-acquisition disputes, including breach of warranty claims; and
• contractual disputes, including commercial agency compensation claims.

The valuation of a business is an inexact science. The value will often depend on the anticipated future prospects, not only of the business involved but also of the industry in which it operates and the wider economy more generally. Those prospects cannot be predicted with certainty, and in order to present a reliable and robust assessment a valuer must demonstrate sound and commercial professional judgement.

Drawing on our forensic expertise and valuations experience, we are able to provide a commercial approach to business valuation. We are regularly instructed to provide a range of valuations for the business concerned, with an opinion as to where the value might most reasonably fall within that range. This advice, often provided at the pre-action stage, assists in formulating an efficient and proportionate litigation strategy.

At the other end of the spectrum, we are able to provide a comprehensive expert valuation report, acting on behalf of either one of the parties involved or as a single joint expert.

Acting on behalf of the accountants of a divorcing husband.  On divorce, the husband failed to disclose his interest in two significant offshore trusts containing a sizeable shareholding in a major UK tool retailer.  The wife successfully set aside the financial settlement when this omission later came to light, and the husband was ordered to make a considerable additional payment to her.  The husband then sued his accountants for negligence.  We were asked to evaluate the worth of the shares held by the trusts at various points in time relevant to the divorce process, relying on information that would then have been available.

Acting on behalf of a 50% owner-director of a glazing business who fell out, and subsequently excluded, the co-owner – who in turn initiated an unfair prejudice claim.  We were asked to quantify the values of each parties’ interests in the business, at various dates and under a number of alternative scenarios driven by allegations made by the two directors (including diversion of trade, and inappropriate use of company funds).  The matter settled following a mediation.

Acting as expert to quantify the claim of an agent following the termination of a contract to purchase uncut diamonds on behalf of its principal.  The claim was brought under the Commercial Agents Regulations, although there was significant disagreement between the parties regarding the terms of the arrangement and scope of services provided.  The agent acted on behalf of a number of principals, and a key issue was fairly allocating the agent’s costs between each of those.  Following a hearing at the High Court at which we gave expert accounting evidence, the client was awarded substantial compensation.

Acting for a retailer who had a site within its property acquired under a CPO resulting in an extinguishment claim.  Assessing the loss entailed benchmarking the performance of the acquired site against other stores within the retailer’s extensive store portfolio.

Our extensive experience in this field includes acting in the following areas:

• Professional negligence claims
• Breach of contract
• Breach of warranty
• Completion account disputes
• Misrepresentation claims
• Product recall claims
• Regulatory disputes
• Royalty disputes
• Personal injury and loss of dependency

Our team excels in delivering detailed economic and accounting analyses that have helped many clients achieve successful resolutions to their disputes. We aim to provide information that is transparent and concise and supported by financial evidence that meets the needs of our clients and their respective legal advisors at all stages throughout the dispute settlement process.

Our technical ability is second to none. We are the first to recognise that loss of profits does not equate to loss of accounting profits and that the legal issues at the heart of the dispute can make a significant difference to the quantum calculations.

We can provide supportable opinions as to whether breaches of accounting warranties, particularly in SPAs, have occurred, and our assessment of the losses arising from any alleged breaches, including potential overpayments for businesses, supported by statistical or market data.

We operate in all recognised resolution channels, including litigation, arbitration, mediation and assisted settlements, and have been appointed in many capacities, as an expert witness, shadow expert, jointly appointed expert and court appointed expert.

Our flexibility in approach as expert or consultant will assist you in achieving your objectives.

Acting on behalf of the owners of a seaside holiday park whose business was severely impacted by coastal erosion arising from a local port authority’s negligent harbour scheme.  We were instructed to assess the losses suffered by the holiday park.  Those losses included long-term mitigation and monitoring measures, quantified on a discounted cash flow basis, together with the loss of profits arising from a reduction in caravan sites and visitor numbers whilst the remedial work was being undertaken.  There was also a significant claim relating to management time.

Acting on behalf of the defendant in a claim relating to a licence for the development, manufacture and distribution of a medical product into the Chinese market.  The claimant terminated the agreement due to alleged failure to develop and support the product, and claimed loss of profits and wasted costs.  We critically appraised the claimant’s projections and demonstrated that the underlying assumptions relating to market size, growth and penetration were unsustainable, and hence that the claim was significantly overstated.

Quantifying the losses suffered by a catering company following the early termination of a services agreement by a Championship football club.  We presented loss of profits calculations under alternative scenarios covering, for example, promotion to the Premier League and qualification for the Championship play-offs, and used data for comparator clubs to estimate the impact of on-field success on attendances.  Prospective attendances, in turn, were a key driver of the match-day catering revenues that would have been anticipated over the remaining three seasons of the agreement.

Acting on behalf of the buyer of a construction business, who wished to claim under share purchase agreement warranties.  We were able to demonstrate that the historic profits of the business had been overstated through acceleration of revenue recognition and suppression of costs, in contrary to UK GAAP and thereby in breach of the warranties.  On the back of our work, a claim was made against the vendor warrantors.

Acting on behalf of an information technology contractor whose contract with a local authority was terminated early.  Under the terms of the contract, the contractor was entitled to unrecovered costs, breakage costs and certain loss of profits.  We reviewed the merits of and advised upon the contractor’s claim.  Particular issues included the basis on which staff time was recorded and treated within the claim – including an adjustment for overhead absorption – and the finance costs that could properly be justified.