Jim Davies, Partner in FRP’s Financial Advisory team regularly provides expert evidence in respect of litigious and contentious valuation matters heard in the High Court. Contentious valuations: The art of the counterfactual
Establishing the true value of something that has been transacted upon (such as an asset, business or investment) is often at the very heart of commercial disputes that end up in litigation. A transfer of ownership may have occurred (or been prevented) at some historical date, and a stakeholder whose economic situation has been negatively impacted may develop a hypothesis that the value the subject asset was transacted at was not a reflection of its true value. If that party feels they have suffered economic loss as a result, they may be inclined to litigate. Typically, a claimant will allege that: (i) something was transferred out of their ownership (or economic benefit) at an undervalue, or into their ownership at an overvalue, and (ii) certain actions taken by another party had caused the transfer to take place at the price that it did. Alternatively, the allegation may be that certain actions of another party had caused a transfer not take place at all, or value to not have been transferred or created in a way that it otherwise would have been.
Given the range of circumstances that can lead to commercial disputes, there is unlimited variation in the background detail of value-centric allegations – each case is essentially unique. However, where there is perceived discrepancy between the price at which an asset has transacted and that asset’s true value, it is common for the claimant to allege that illegality or negligence in respect of information or process has played a part, and that an accused party is to blame. Evidence around valuation can become the central battleground of such cases.
Jim Davies Partner Financial Advisory London +44 (0)7841 829 826 jim.davies@frpadvisory.com
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