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Forensic accounting expertise in the resolution of shareholder disputes

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BTG Advisory provides forensic accounting expertise in the resolution of shareholder disputes involving unfair prejudice claims.

You or your colleagues may be advising in shareholder disputes. Typical issues involved, and particularly in unfair prejudice claims, non-exhaustively include:

  • The required bases and valuation dates;
  • Valuation of the subject shareholding on a factual basis;
  • The required counterfactual basis and valuation, but for the alleged prejudicial conduct about which complaint has been made;
  • Construction of the required counterfactual financial state of affairs;
  • The identification, quantification and treatment of alleged illicit non-business transactions particularly distributions including, for example, ‘profit siphoning’ and excessive director and staff remuneration;
  • The identification and quantification of changes in the accounting treatment of material items;
  • Suitability and choice of valuation approaches;
  • Assessment of future maintainable and sustainable earnings prospects and surplus assets and liabilities;
  • Market valuation of significant assets, assessment of liabilities, contingent assets and liabilities and working capital needs at the required Valuation Date(s);
  • Comparator valuation references including comparable transaction data; and
  • Minority discount or quasi-partnership considerations

Appointees from BTG Advisory are skilled, experienced and accredited in the provision of independent forensic accounting expert witness services. The following are some relevant case examples of their expert input that helped to resolve shareholder disputes and claims for unfair prejudice.

  • Case Study 1:
    We were appointed in a minority oppression shareholder dispute in relation to a UK and Turkish-based clothing and cosmetics business manufacturing and selling to leading high-street retailers. We assisted in preparing valuations and giving advice to assist in reaching a settlement through the very many difficult allegations brought by the minority shareholder.
  • Case Study 2:
    Shareholders in an operator of leading nightlife entertainment venues had a major falling out about the conduct of the affairs of the group. The respondent’s long-standing legal advisers engaged our Forensic Services team to provide forensic accountant expert witness services in an unfair prejudice claim arising from the dispute and pursuant to section 994 of the Companies Act 2006. The remit to assist the court was to provide expert evidence on the issue of the value of the petitioner’s shareholding in the deemed group of companies. This was subject to the Civil Procedure Rules and the extensive detailed requirements of the applicable order (and preceding judgment) for the basis of the valuation for compensatory purposes. The secondary remit was to assist the client and their legal team by way of forensic accounting consultancy services. Our work  demonstrated that the valuation amount claimed by the applicant, and supported by their expert accountant, was materially overstated. The parties successfully achieved a settlement following negotiations after the meeting of experts and the joint statement stages had been completed. This avoided the need for a trial and the uncertainties and additional costs involved. The resulting settled valuation was a small fraction of the amount claimed by the applicant.

If you or your colleagues are seeking to appoint a forensic accountant expert witness for a shareholder dispute or other dispute, or are looking to appoint an arbitrator or expert determiner for the binding resolution of a commercial dispute, please get in touch with your usual BTG Advisory contact or the Forensic Services team (contact details below).

Further information can be found at:

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