Take part in our new Family Business Survey and have your say! Click here
Our legal sector team has a great deal of experience of valuing practices for a variety of purposes including retirements; disposals; mergers; incorporations; restructuring; and increasingly with disputes. We also have experience of being appointed as a single joint expert witness to value practices where the owners are in dispute. However despite all of that experience, each valuation is bespoke and presents different challenges, especially with disputes.
In this particular case, we were approached by an individual that had left a law firm that he had established some years previously. The terms of the shareholders’ agreement provided for an independent valuation to be carried out following appointment of an arbitrator by the President of the ICAEW. Our remit was to work on behalf of the individual with his dealings with the arbitrator and the other parties to the dispute.
The other parties were to remain as owners of the practice and had offered a valuation of our client’s shares of almost £nil. Our client expected considerably more and had fallen out with his former colleagues as a result. Legal action had also been taken and each party was being advised by other lawyers. We therefore needed to liaise with the individual’s legal advisers; take care not to interfere with the legal process; or to adversely impact upon it.
What we did
We were instructed to carry out a valuation of the law firm for submission to the independent arbitrator. We prepared a fully substantiated valuation report taking into account all of the issues of the firm and the changes in the wider legal market. This was prepared on the same basis as if we were the independent arbitrator. We always take this approach and will only put forward a valuation that we could defend in court if required. We do not artificially inflate valuations as part of a negotiation process.
Our calculations showed a value of the individual’s shares in excess of £100,000. We submitted our report on that basis and responded to the other party’s submission on behalf of our client.
The independent arbitrator’s valuation was in line with our calculations and report and in our view provided a fair valuation for all concerned. More importantly for our client, it was a result that he was delighted with.
All content © 2015 Armstrong Watson. All Rights Reserved. Website by Simon Pighills.
Armstrong Watson LLP is a limited liability partnership registered in England and Wales, number OC415608. The registered office is 15 Victoria Place, Carlisle, CA1 1EW where a list of members is kept. Armstrong Watson Accountants, Business & Financial Advisers is a trading style of Armstrong Watson LLP. Armstrong Watson LLP is regulated by the Institute of Chartered Accountants in England and Wales for a range of investment business activities.
Armstrong Watson Audit Limited is registered to carry on audit work in the UK and Ireland by the Institute of Chartered Accountants in England and Wales. Registered as a limited company in England and Wales No. 8800970. Registered office: 15 Victoria Place, Carlisle, CA1 1EW
Armstrong Watson Financial Planning Limited is authorised and regulated by the Financial Conduct Authority. Firm reference number 542122. Registered as a limited company in England and Wales No. 7208672. Armstrong Watson Financial Planning & Wealth Management is a trading name of Armstrong Watson Financial Planning Limited. Registered Office: 15 Victoria Place, Carlisle, CA1 1EW