Businesses come in all shapes and sizes, as such, no two disputes are the same.
It can be hard to know when there may be a dispute after the sale and where there will be a need for an expert determination to settle the business valuation.
So, here are some examples of where we have been appointed to provide an expert determination in various industries.
A business being sold with ageing plant and machinery that may require upgrading or repair, it is vital that both parties investigate the state of the equipment before concluding sale negotiations. We have seen situations where the new owner has claimed after the sale that machinery was in such a poor state of repair that it was worthless or needed a great deal of attention, thus reducing its value in the completion accounts or charging for repairs, thus reducing the reported profits and the earn out payment.
The same goes for a business where the buyer needs to introduce changes in practices and restructuring will be required going forward. We have seen situations were the buyer has incurred considerable restructuring costs and reduced the earn out figure to almost nothing. In this situation it is vital the SPA is drafted in such a way that these reorganisation costs fall on the new business owner and the seller is not disadvantaged in any earn out payments due.
For a business involving facility management, such as a nursing home or care facility, the business will rely on plant and utilities that are essential to maintain the safe continuation of the business. Without knowing the state of these utilities, a buyer can be in for a rude shock once they take over the property if they discover that the utility equipment do not meet health and safety standards. After all, it will be in the buyer’s interest to make their own pessimistic assessment of the value adjustments and so lower the value of the business and payment to the seller..
We have acted in many expert determinations and can draw on this experience to help sellers when agreeing the terms for completion accounts and earn out calculations. We can also help when preparing submissions to an expert appointed to prepare an expert determination in order to put their best case forward in a convincing way.
To find out more about our expert determination experience, please click here and I’d be happy to have a ‘commitment free’ discussion about your issue.