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High Court, in proceedings seeking damages against company shareholder for oppression in the context of the running of the company and its affairs, decides on appropriate 'multiplier' to be applied to the company's earnings before interest, tax, depreciation and amortisation for the purposes of valuing one party's shareholding, and departs from the parties' financial experts' evidence of the appropriate multiplier to be applied; and in so doing, it addresses year-end sales figures and profits before tax as an illustration of the general picture of the company's accounts where the multipliers provided by the party's experts are not in line with relative businesses in the respective industry, nor are they reflective of certain business risks now and in future.
Company shareholding relationship - value of shareholding - value of company profits - net asset value of company - appropriate multiplier to be applied to earnings before interest tax depreciation and amortization - acceptance of technical oppression - court's jurisdiction to make order dependant on finding of oppression or disregard of interests - company background - expert financial evidence - multiple to be applied - weighting exercise subject to assumptions - factors relevant to valuation - hearsay in the context of expert witness reports - difficulty in sourcing appropriate comparators - sources used by expert related to businesses of a different size and magnitude - no acceptable or appropriate evidential basis for selection of multiplier - court's conclusions on factors applicable to consideration of appropriate multiplier - general picture emerging of company's financial position
Note: This is intended to be a fair and accurate report of a decision made public by a court of law. Any errors should be notified to the editor and will be dealt with accordingly.
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