Share & Business Valuations

Covid has had a massive effect on all our lives and changed how we as forensic accountants approach our work, particularly in arriving at business valuations for contentious and non-contentious purposes. This blog sets out some of the factors to consider when assessing the impact.

The valuation of shares in a company can be complex and even more complicated when valuing a minority shareholding. In a recent case, I was asked to provide an opinion as to whether the valuation of a minority shareholding provided by the husband’s accountants was ‘broadly correct and appropriate’. On this occasion there was a shareholders’ agreement which provided detail regarding the shareholders’ rights, obligations and liabilities including a ‘Drag-Along and Tag-Along ‘clause. What are they, why are they necessary and how do they affect the valuation of a minority shareholding?

I am regularly instructed to prepare business valuations for both contentious and non-contentious purposes and the first question I am often asked is what information do I need. To assist I have prepared a basic checklist of the information and documentation I would require to get the process started.