Economic damage assessment
Value Drivers Business Valuators offers entrepreneurs advice in the context of the assessment of the amount of economic financial damages and losses. Frequently, these economic loss calculations are executed to support / in collaboration with lawyers with a procedure. In case of an economic dispute, a register valuator is the eminent expert to determine the amount of the financial losses and damages. In these cases, the register valuator can function as a party expert, but also as an independent expert. This occasionally happens as a result of appointment by court.
Damage to an enterprise can occur as a result of external events like a flood, but also as a result of a breach of contract by a client or a supplier. A dispute that concerns a breach of contract can lead to financial loss in that case. An example could be infringement of trademark or not following up to a distribution agreement. In case your enterprise is subject to financial loss, the size of the loss and the causal relation between the damage-causing event and the loss will be determined, in order to determine the compensation. In the context of valuation, these cases involve economic loss:
The negative difference between the financial position in case the damage-causing event would not have taken place (‘’soll’’ position), and the financial position in case the damage-causing event would have taken place (‘’ist’’ position).
Lost profits and additional costs
This includes, among others, the determination of the lost profits, the occurred loss, the eventual specific capital expenditure in machinery and personnel, and the costs to limit the, as a result of the damage. This damage can directly be determined by separately calculating the losses economic damages and the loss of profits as such. A second possibility is to indirectly determine the financial loss and economic damages. This method will be executed through valuation of the enterprise right before the moment of loss and right after this moment. The difference between both values is the incurred financial loss.
Points of attention when determining financial loss
Of importance to the draft of a financial loss and damages report, are a solid foundation and argumentation of the assumptions used to determine the incurred loss. Important points of attention are, among others, the quality of the forecasts, the determination of the loss period and the type of loss that is incurred. The advisors of Value Drivers Business Valuators can support you as party experts or as independent experts in case of an economic loss procedure.