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Contentious Valuations

Honeycomb aims to strike the right balance between detailed analysis, technical considerations and commerciality. Our forensic team has a wealth of experience in valuing businesses of different structures, size and complexity across a variety of industry sectors.

We offer a range of services including valuations of businesses as a whole and minority shareholdings. We act on behalf of parties involved as joint experts, determinaters, or as advisors in assisting with submissions. Honeycomb has experience of working for both claimants and defendants, applicants and respondents, majority and minor shareholders and husbands and wives alike. The team also has many years’ experience providing expert oral evidence when cases are taken to court.

Managing Director Jeffrey Davidson is on the ICAEW President’s panel of valuers and he regularly takes on appointments as the expert in determinations.

Business and asset valuations are required in various contentious situations. Most often these include:

• Disputes over the ownership and value of commercial enterprises

• Cases where the valuation by another professional has been called into question

• Situations where the loss or extinguishment of a business constitutes the best measure of loss in a claim for damages, and

• Cases where it is necessary to establish value to help determine by whom and in what measure benefit has accrued to a target.

Honeycomb includes an expert valuations practice with considerable experience dealing with valuations and reporting across all these contentious circumstances, including:

• Shareholder and partnership disputes, where one party is seeing to buy out the other, or where minority shareholders are claiming unfair prejudice

• Negligent valuations

• Matrimonial matters, where the assets of one (or both) parties are represented by business interests

• Disputes following the sale of a business

• Post-acquisition disputes, including breach of warranty claims

• Contractual disputes, including commercial agency compensation claims, and

• Business extinguishment and loss of profit claims.

Contentious Valuations Case Studies

Joinery Business Unfair Prejudice Shareholder Dispute

Jeffrey Davidson was instructed as the expert on behalf of a party to a shareholder dispute in a joinery business involving allegations of unfair prejudice. The case involved a valuation of the businesses which came together at the beginning of the parties’ relationship, a valuation of the businesses when the relationship fell apart, and consideration of activity and transactions in between which may have affected the end value. The case came to Court in 2015 and involved a number of particular technical valuation points including when is it appropriate to value a business at £1, and to what extent do missing assets, in particular WIP, contribute to the value of a trading enterprise. Judgment was given in favour of the party on behalf of whom Jeffrey was instructed. In the judgment, the court stated: “Where there was a difference between the experts, I found the reasons given by Mr Davidson to be more compelling than those given by Mr X”. The judge further stated that “Mr Davidson’s approach to the value of WIP is the better approach to take…I accept Mr Davidson’s conclusion…”

Government Department Ruination Claim Valuation

Jeffrey Davidson was instructed as the expert to a government department defending in a case which involved valuing a business as the basis for a business extinguishment or ruination claim. The case went through a number of valuation iterations. Particular issues included the involvement of information not known at the presumed valuation date, the relevance of historical and prospective financial information and whether and how to measure maintainable profits. Three separate experts were successively instructed by the claimants all of whom valued the business at a multiple of the value ascribed to it by Mr Davidson. The case settled by agreement at a value within the range given by Mr Davidson, and so at a fraction of the value sought by the claimants.

For further reading:

•   Expert Witness Work  •   Asset Tracing  •  Data Analytics  •  Information and Intelligence Gathering