Independent expert valuation evidence for commercial disputes, prepared to withstand cross-examination.

A business valuation expert witness is an independent specialist who quantifies business loss for litigation — loss of profits, diminution in value or an oppression buy-out price — and gives evidence on it in court. Prismi acts as expert witness under the Federal Court practice note (GPN-EXPT), state expert codes of conduct and APES 225, applying IVS 104 market-value principles, with fees fixed at engagement, never contingent on outcome.

When expert valuation evidence is required

Expert valuation evidence is required when a commercial dispute turns on what a business, or a stream of its profits, is worth. Common matters include breach of contract and loss of profits claims, misleading conduct claims, business interruption and insurance disputes, partnership dissolutions, earn-out and completion-account disputes, and shareholder oppression proceedings. In each case the court needs an independent opinion — not an advocate's number — quantifying loss of profits, diminution in the value of the business, or the price at which a compulsory buy-out should occur. Most engagements are instructed by the solicitor acting in the dispute. Prismi provides the valuation evidence only; we do not give legal or tax advice, and questions of liability, causation and procedure remain with the legal team.

Expert witness obligations and APES 225

A business valuation expert witness in Australia is bound by the Federal Court's Expert Evidence Practice Note (GPN-EXPT) and the Harmonised Expert Witness Code of Conduct it annexes, or the equivalent expert code of conduct in a state court's rules. The obligations are the same in substance: the expert's paramount duty is to the court, not to the instructing party; opinions must stay within the expert's training and experience; every assumption and its source must be identified; and a changed opinion must be disclosed. APES 225 adds the professional layer — a defined basis of value, a documented scope of work, and an independence statement that is real rather than recited. Our fees are fixed at engagement and never contingent on the outcome, because a contingent fee compromises the independence the codes require. Where directed, we prepare joint expert reports, attend conclaves and give concurrent evidence. If instructions ask for a predetermined figure rather than an opinion, we will say so and decline the engagement on those terms.

But-for versus actual: quantifying loss of profits

A loss of profits or business interruption claim compares the position the claimant would have been in but for the conduct with the actual position. That requires a normalised baseline of maintainable earnings before the event; a counterfactual built from contemporaneous budgets, contracts and capacity evidence rather than hindsight optimism; an offset for mitigation and for costs avoided; and discounting of future losses to present value at a rate the report justifies. It also requires discipline about what is legal and what is financial: causation and remoteness are questions for the lawyers and the court, so the loss theory is framed as instructed assumptions the report identifies explicitly. We also test for double counting — a claim cannot recover both the lost profits and the diminution in value that those same profits would have produced.

Valuation date selection and its quantum impact

Damages are conventionally assessed at the date of breach, but courts can and do select a later date — including judgment — where that better measures the loss. For a trading business the choice is rarely neutral: a business that deteriorated after the breach may support a materially higher claim valued at the breach date, and the reverse in a rising market. The information-set rules also change with the date. Valuing at a historical date follows the retrospective discipline that flows from Spencer v Commonwealth (1907) and the Market Value basis in IVS 104 — value rests on what was known or reasonably foreseeable at that date — while subsequent events may still be admissible on the quantification of loss, and the report states which information set was used at each date. Because date selection is ultimately a legal question, we quantify at each date the solicitors identify and present the quantum impact of each, so the court sees the sensitivity rather than a single unexplained figure.

Oppression buy-outs under s 233 Corporations Act

Where oppression is established under s 232 of the Corporations Act, the most common remedy ordered under s 233 is a buy-out of the oppressed shareholder. Three valuation questions decide the quantum. First, the valuation date, which is in the court's discretion and is often chosen to strip out the effect of the oppressive conduct on value. Second, whether adjustments are required to add back value diverted by the conduct — excessive remuneration, related-party arrangements or diverted opportunities. Third, whether a minority discount applies: courts have generally declined to discount an oppressed minority's shares in a compulsory buy-out, but the position is fact-dependent, so we quantify the interest both with and without the discount and identify what drives the difference. The report concludes at the most supportable position and shows the supportable range around it. As with every Prismi engagement, our own working file for the matter is retained for 10 years as a firm record-keeping practice, separate from any statutory retention period that applies to the client's own company records.

Working with instructing solicitors: what the brief should include

• ·A letter of instruction stating the questions, the assumptions to adopt and the applicable court's expert code of conduct
• ·The pleadings — statement of claim and defence — so the loss analysis matches the pleaded case
• ·Financial statements for 3–5 years before and after the event, plus current management accounts
• ·Budgets, forecasts and key contracts prepared before the dispute arose — contemporaneous evidence carries the most weight
• ·Discovered documents relevant to earnings, capacity, causation assumptions and mitigation
• ·Any opposing expert report served, where a responsive or joint report is required
• ·Directions or orders covering expert conclaves, joint reports and concurrent evidence timetables

Tier recommendation

Litigation engagements carry the highest documentation burden of any valuation purpose, because the working file — not just the report — may be tested in cross-examination. The Defensible Valuation File (from $8,995 + GST, 25–35 business days) is the minimum tier we recommend for expert evidence work. Matters involving multiple valuation dates, competing loss scenarios, conclaves or concurrent evidence are better served by the Valuation Range & Scenario Review (from $12,995 + GST, 30–45 business days). Each additional historical valuation date is +$495, additional entities are +$750 each, and rush turnaround is +30%, subject to capacity and the court timetable. Fees are fixed at engagement and are never contingent on the outcome of the proceeding.