Chester 01244 405555

Grosvenor Court
Foregate Street Chester
Cheshire CH1 1HG
DX: 19990 Chester

Shrewsbury 01743 443 043

Lakeside House
Oxon Business Park
Shrewsbury SY3 5HJ
DX: 148563 Shrewsbury 14

Airport City, Manchester 0844 800 8346

Office 129
Manchester Business Park
3000 Aviator Way
Manchester M22 5TG

Send us a message
Our Offices

Business Must Live With Expert Share Valuation

6th October, 2014

A majority business owner who bitterly disagreed with an expert valuation of his company’s worth will have to pay more than £4 million to buy out his estranged co-owner’s minority shareholding, following a ruling of the Court of Appeal.

The majority owner owned 60 per cent of the company’s shares and his co-owner 40 per cent. After the pair fell out, the minority owner’s employment was terminated. He claimed, amongst other things, that his dismissal was unfair; however a compromise was reached whereby the majority owner and the company agreed to buy him out.

It was agreed that the valuation of the minority shareholding – which was no easy matter as the company’s success relied largely on trust and good working relationships – would be decided by a firm of accountants acting as expert. The accountants agreed their appointment and issued a letter of engagement setting out the terms of reference.

The majority owner and the company fiercely objected when the accountants reported that the minority shares were worth £4,218,000.
Their challenge to the valuation was, however, dismissed by a judge. I appealing against that decision, the majority owner and the company made wide-ranging criticisms of the accountant’s methodology and argued that the minority shares were only worth a fraction of the sum at which they had been valued.

However, in dismissing the appeal, the Court noted that the parties had voluntarily submitted the valuation exercise to the accountants and ruled that their report was binding, regardless of its alleged flaws. The Court observed, “Parties who refer a dispute to an expert must be taken to have recognised that mistakes may be made, both of fact and law, but they are prepared to take that risk because they place a high degree of confidence in their chosen expert.”

If you are in dispute with business partners or fellow shareholders, we can assist you to obtain a fair settlement please contact Nick Clarke on 01244 405558 or email [email protected]

You might also be interested in...

Is there such a thing as a good divorce?

22nd November, 2018

Family Law Partner Sandy Edwards believes there is. Next week, from 26 to 30 November, Resolution, an organisation of 6,500 family lawyers and other professionals, will be promoting “Good Divorce Week” which will focus on how separating and divorcing couples can put their children’s needs first and limit the impact of conflict. The week falls during the government’s divorce... Read More »

Ethics Guidance – Transparency in Price and Service

16th November, 2018

It is reported that a quarter of all complaints dealt with by the Legal Ombudsman revolve around costs. Therefore to avoid complaints and confusion, it is important to be clear from the outset. The new Transparency Rules (which the SRA have now confirmed will come into effect on 6 December 2018) require that accurate and relevant information is... Read More »

Aaron & Partners Increases Recommendations in Leading Industry Guide, The Legal 500

5th November, 2018

Aaron & Partners LLP has once again seen improved rankings in The Legal 500 – a comprehensive guide... Read More »

Contact Us