Dispute valuations for industrial businesses

Which industrial disputes need a valuation?

• Shareholder deadlock. Two founders of an engineering company fall out and the shareholders agreement's valuation clause is triggered.
• Partnership splits. A partner leaves a machinery dealership or a transport business run as a partnership, and the partnership agreement sets how the share is valued.
• Oppression claims. A minority shareholder alleges the company is being run against their interests and seeks an order that their shares be bought.
• Earn-out disputes. After an acquisition, the vendor says the buyer let the key contract lapse; the buyer says the contract was never secure. Both sides need a view of value with and without it.
• Completion accounts disputes. Buyer and vendor disagree about the stock count, work in progress or the normal level of working capital, and the price adjustment turns on it.
• Loss of value claims. A supplier's breach, a lost contract or a damaged plant is said to have reduced what the business is worth, and the claim needs a value with and without the event.

What is an independent expert determination?

Many shareholders and partnership agreements say that if the parties cannot agree on a price, an independent valuer will determine it, acting as an expert and not as an arbitrator, and that the determination is final except for manifest error. It is quicker and cheaper than litigation, and the parties get a decision from someone who understands how a factory or a fleet earns its money.

We accept an appointment only where we are independent of both sides and have not advised either of them on the value. We follow the process the clause sets: who instructs us, whether the parties make written submissions, how information requests and answers are shared, whether a draft is issued and whether reasons are given. Every party sees the same information we rely on.

What changes when the valuation is for court?

A report prepared for commercial purposes is not a court expert report. Court or tribunal work is a separate engagement with its own scope and fee, because the report has to meet the rules of the court where it will be used. In the Federal Court, for example, the Expert Evidence Practice Note (GPN-EXPT) and its Harmonised Expert Witness Code of Conduct apply. The practice note says an expert should never become an advocate for the party that retained them, that parties should not treat their expert as a hired gun, and that an expert's assumptions and reasoning must be stated. State courts and tribunals have their own rules, and your lawyer will tell us which apply.

In shareholder litigation, the valuation often follows a claim under section 232 of the Corporations Act 2001 (Cth), where conduct is said to be oppressive, unfairly prejudicial or unfairly discriminatory against a member, or is contrary to the interests of the members as a whole. Section 233 lets the court make a range of orders, including that a member's shares be purchased. The court then has to fix a price, and the competing expert reports are usually where that argument is won or lost.

Court work also involves more than a report: a letter of instruction setting out the questions and assumptions, conferences with the other side's expert, a joint report on where the experts agree and disagree, supplementary reports when new evidence arrives, and possibly giving evidence. We scope each of those steps in the quote so there are no surprises later.

Where do valuation experts usually disagree on industrial businesses?

A good expert report makes each of these explicit, shows the effect of the main alternatives where the instructions leave room, and keeps to the facts the expert is asked to assume. The general approach is on how we value industrial businesses; the shareholder-specific issues are on shareholder valuations.

Can you review the other side's valuation?

Yes. Lawyers often ask for a review of an opposing valuation before deciding whether to commission their own: where the earnings, capital spending or working capital assumptions are weak, what was left out, and whether the conclusion follows from the analysis. A review is a different role from acting as the independent expert. If we review a report for one party, we will not later accept an appointment as the independent expert between the same parties.

What evidence does a dispute valuation need?

• Financial statements, management accounts and the general ledger, so adjustments can be traced to transactions.
• The shareholders or partnership agreement, the constitution, minutes and any offers made.
• The asset register, finance agreements and maintenance records for the main plant and fleet.
• Customer contracts, change-of-control clauses and the order book.
• Operating records: production volumes, capacity utilisation, job costings and the quote pipeline.

In proceedings, how documents are obtained from the other side is a matter for the lawyers. Documents reach us only through the private upload link on the matter, never by email, and your information stays confidential.

How is dispute work quoted?

Dispute and expert work: Quoted individually. Send us the valuation clause or the pleadings, the parties, the valuation dates and the timetable, and we confirm the scope, the fee and the delivery date in writing. We confirm the fee in writing before we start. No hourly billing. If you are not yet sure whether the matter will settle or go to court, tell us; a commercial valuation can be scoped now, and any court report would be a separate engagement later. For family law property matters, our dedicated family law practice, Family Law Valuations, prepares the valuation; see our family law page.