Client Case Study

2. Case Challenges:

This case presented several challenges such as:

1. Limited Documentation:

Although the business was established with over 20 years of operations, the financial statements provided were incomplete, making it difficult to obtain a clear understanding of the business’s financial performance and asset details.

2. Asset Evaluation:

Assessing the value of HVAC systems and equipment can be complex, especially if there is a lack of detailed information on their condition, age, and market value.

3. Market Volatility:

The HVAC industry may experience market volatility, such as changes in demand, regulations, or technological advancements. These factors impact the business’s value and business life cycle stages within the engineering industry is usually overlooked or undermined.

Apart from the technical challenges, working alongside a client with limited valuation understanding presented some communication challenges.

Furthermore, we encountered a hurdle when the opposing party presented a valuation report from another valuer to challenge our assessment. This usually extends the divorce proceeding and increases the complexity of the valuation scope of work.

3. Overcoming the Challenges: 

1. Limited Documentation:
   • We reconstructed financial data and also worked closely with the wife’s divorce lawyers to obtain additional financial records from the other party.
   • We also utilised industry benchmarks and data sources to estimate missing data points and ensure a more accurate valuation.
2. Asset Evaluation:
   • We got in contact with specialised appraisers with expertise in HVAC systems and equipment to provide an assessment opinion of the assets.
   • By considering factors such as asset condition, functionality, and market comparables, we were able to gauge value of the assets as an additional cross-check to our model.
3. Market Volatility:
   • We analysed monitored market trends, industry reports, and regulatory changes to assess the potential impact on the business’s value.
   • We presented a comprehensive assessment that went beyond surface-level net profit figures, highlighting potential hidden value drivers and considered that the business was an established one with strong foundations.
   • We also conducted scenario analyses and sensitivity testing to account for various market volatility factors and provide a comprehensive valuation that considered potential future shifts.

Our team effectively defended our valuation through a series of rigorous exchanges by the opposing valuer. We anticipated potential areas of contention and prepared well-supported arguments to address any challenges raised by the opposing valuer.

We analyzed the data used by the opposing valuer, comparing it with our own data sources and industry benchmarks. Whenever our assumptions were questioned, we supported them with relevant market research, industry knowledge, and historical data.

Whenever we identified flawed reasoning or illogical conclusions in the opposing valuer’s arguments, we pointed them out and raised flags on inconsistencies. To highlight the weaknesses in the opposing valuer’s reasoning, we used logical counter-arguments, supported by data and industry expertise.

Throughout the series of questioning, we maintained a professional demeanour in our responses ensuring that our replies were composed, respectful, and confident.