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A certified valuer will listen to your situation and answer any questions you may have, at no cost.
When the co-owners of a Dapto fabrication company or the partners in a North Wollongong accounting firm can no longer work side by side, the real contest is over what the exit is worth. We build that figure so the opposing expert has to meet it head on.
Indicative valuations from A$799. Certified Summary and Detailed reports from seven business days.
Most Wollongong shareholder and partnership disputes end with one owner buying out the other, and the buy-out needs a price that survives challenge. We value the interest with and without a minority discount, at every date the case calls for, restore value removed by oppressive conduct, and write the reasoning for the Supreme Court of New South Wales.
Two directors of a Dapto fabrication company who now communicate only through solicitors, a North Wollongong accounting practice where one of three partners wants out, a Shellharbour family company in which the siblings working in the business have stopped paying dividends to a sibling employed elsewhere: disputes like these seldom end in a winding up. They end with one side purchasing the other's interest. Sections 232 and 233 of the Corporations Act 2001 allow the Court to intervene where a company's affairs are conducted oppressively or unfairly, and the order most often made is for the other members or the company to buy the aggrieved member's shares.
That order needs a price, and arriving at it takes judgement rather than arithmetic. The basis of value, the date and whether a minority discount applies depend on the conduct the Court finds proved, not on a valuer's habits. A valuation that would satisfy a bank or an auditor can unravel under cross-examination if it assumed answers the Court has not yet given.
The same is true before any proceedings are filed. A buy-out under a shareholders agreement, the dissolution of a partnership and an expert determination each turn on a contested value between owners who have fallen out. Many New South Wales disputes go to mediation first, with a private mediator or, for some small business matters, the NSW Small Business Commissioner, and a figure from a valuer neither side controls is often what brings the parties to a negotiated exit. If it does not, that figure becomes central evidence in the Supreme Court of New South Wales in Sydney.
We act for shareholders, partners and their lawyers across the Illawarra, from closely held manufacturers in Port Kembla, Unanderra and Dapto to professional and health practices in the Wollongong CBD, family businesses in Shellharbour and Kiama, and trades firms in Albion Park Rail. One party can retain us, both can appoint us jointly, or we can act as the determining expert whose decision the parties have agreed to accept.
A certified valuer will listen to your situation and answer any questions you may have, at no cost.
Whether the conduct was oppressive is for the lawyers to argue and the Court to decide. The valuer shows how each possible finding alters the value, because the alterations are large.
Section 232 applies where the conduct of the company's affairs, an act or omission, or a members' resolution is contrary to the interests of the members as a whole, or is oppressive, unfairly prejudicial or unfairly discriminatory towards a member. The unfairness test is objective and commercial, and dishonesty need not be proved. Typical complaints include exclusion from management, work diverted to a related entity, directors' pay far above market, years without dividends, withheld information, dilutive share issues and generous related-party dealings.
In an ordinary sale, a minority stake in a private company is worth less per share than the company as a whole, since the holder has no control and few buyers. In oppression cases courts have often refused that discount, reasoning that a member pushed out by the majority should not give the majority a further gain. A quasi-partnership history, the way the shares were acquired and whether the conduct forced the exit all bear on the answer. Both figures are reported, together with the difference.
The default is the hearing date or the date of the order. Where the conduct has eroded the company's value, that date rewards whoever eroded it, so the other side may argue for an earlier date such as the member's exclusion or the filing of the claim. Another route is current value with the lost value added back. In practice we are normally instructed to give figures at two or more dates.
Where value has been removed, the valuation may need to restore it: directors' pay above the market rate for the role, proved by salary benchmarking and not assertion; work and margin moved to another entity; related-party rent, management fees and loans restated at arm's length; and private costs paid by the company. These adjustments often move the result further than the choice of method, and each is fought individually.
Where the constitution or a shareholders agreement sets a price formula, pre-emptive rights or a compulsory transfer process, that clause governs a contractual buy-out, and the first job is to establish what it really demands: fair value or market value, at which date, decided by whom. In oppression proceedings the Court's power under section 233 is not confined by the agreement, so the formula becomes one piece of evidence to weigh, particularly where the minority says the formula was part of the unfairness.
The techniques are those used for any private company; what differs in a dispute is that both sides challenge every input. A trading company is generally valued mainly under the income approach, applying a capitalisation rate or multiple supported by comparable evidence to the earnings it can sustain once the accounts are normalised. The majority will argue the earnings and the multiple down and the minority will argue them up, so each input is traced to a source the Court can check.
We treat forecasts prepared by the controlling party after the dispute began with caution, forming and stating our own view instead of adopting theirs. The asset approach moves forward when the company owns land or investments, when trading is declining, or when the Court is weighing a winding up against a buy-out and needs to know which leaves the minority better off. Earlier share transfers, offers received and buy-ins by other members are relevant market evidence, although a related-party deal or a price set by an untested formula carries less weight, and the minority will often say a low historical price was itself part of the oppression.
Dissolving a Wollongong partnership raises the same issues in another form. The Partnership Act 1892 (NSW) and the partnership deed together set each partner's entitlement on dissolution, which in practice turns on the value of the partnership assets, and in a professional firm goodwill is usually the largest. Whether that goodwill stays with the firm or leaves with the departing partner decides most splits in accounting, legal, engineering, medical and dental practices, from firms along Crown Street and in North Wollongong to specialist practices serving patients of Wollongong Hospital and Shellharbour Hospital.
A shareholder dispute valuation that collapses has usually fallen to one of these causes, and most of them are in place before any figure is calculated.
The depth of the report is set by who will read it, not by the size of the company. Partners settling a buy-out in good faith need less than a report that the opposing expert, a mediator and in time a judge of the Supreme Court of New South Wales will examine page by page.
Each dispute report records who instructed us and which questions we were asked, the assumptions made and the documents reviewed, then moves from those facts to each conclusion so a reader new to the matter can follow it. Where several bases or dates are requested, the figures sit side by side with an explanation of the difference. We state limitations openly, including any documents a party did not produce. We write expecting another expert to look for the weakest point, because in a dispute one will.
In the Supreme Court of New South Wales, which sits in Sydney, the report is prepared to meet the Expert Witness Code of Conduct in the court rules, under which the expert's duty to the court comes before any duty to the client; in the Federal Court of Australia it follows that court's expert evidence practice note. The certified valuer who signs the report attends conferences of experts, contributes to joint reports recording what is agreed and what remains in dispute, and gives evidence, alongside the opposing expert if the court directs concurrent evidence. We also review the other side's report as a consulting expert, identifying unsupported assumptions and lines for cross-examination, and we act as determining expert where both parties have agreed in advance to be bound by the result.
Will you meet the other expert and then give evidence on this report in the Supreme Court of New South Wales, concurrently with them if the court so orders? If the answer is anything but yes, find another valuer before the case is under way.
Talk your situation through with a certified valuer before you commit to anything, at no cost.