Finalto Group Limited

FRA was engaged to provide independent valuation expert evidence in litigation before the London High Court relating to a dispute between two former executives of Finalto Group Limited as claimants and Finalto and its parent company, Gopher Investments, as respondents.

The claimants alleged they were entitled to equity under a management incentive plan that was to be implemented following the business acquisition. When the plan was not implemented, they sought to recover the value of the shares they claimed would have been awarded.

The matter required an independent assessment of the acquired business’s value across the relevant valuation dates, together with expert analysis capable of addressing competing valuation opinions in the context of commercial litigation.

Applying independent valuation expertise to assess competing claims

FRA Director Victoria Richards was retained as the respondents’ valuation expert to provide independent opinions on enterprise value at the relevant valuation dates and evaluate the methodologies and conclusions advanced by the claimants’ expert.

Ms. Richards and the FRA team:

• Assessed the enterprise value of the acquired business using the market approach, including analyses of comparable public companies, comparable transactions, and distributable cash
• Analyzed the company's post-acquisition financial and operating performance to assess the impact on enterprise value
• Evaluated multiple sources of market evidence, including precedent transactions, contemporaneous offers for the business, and other relevant market indicators to support the valuation analysis
• Critically assessed valuation opinions that differed by approximately US$40–50 million in enterprise value and prepared detailed rebuttal analyses of the methodologies and assumptions applied
• Prepared independent expert reports and valuation evidence for use in the London High Court proceedings

The Court found Ms. Richards’ valuation methodology to be more persuasive than the opposing expert opinions, noting:

“I prefer the evidence of Ms Richards (…) for two principal reasons. In the first place, Ms Richards relied on a number of types of evidence for her estimate, based on comparable companies, comparable transactions (with adjustments for control premiums and private company discounts) and distributable cash. These appeared to me to be reasonable exercises, competently performed.” (High Court of England and Wales, Ron Hoffman & Anor v Finalto Group Limited & Anor, ¶ 103)

A successful outcome before the High Court

The Court accepted FRA’s valuations in full, without adjustment, preferring FRA’s valuation approach, which drew upon multiple sources of market evidence and accepted methodologies to address the central issues in dispute.