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Assisted an overseas investor in a business disputes valuation

Engagement: A leading Indian law firm approached SKP to value equity shares of a joint venture, in connection with an alleged breach and violation of the terms of the joint venture agreement resulting in disputes and differences among the shareholders.

Solution/Value Addition
Our team analysed the facts of the case and discovered that the company not only failed to comply with the payment terms for ordinary commercial transactions but also defaulted in payment of taxes and other statutory liabilities which resulted in compounding penalties. These penalties had a huge diminishing effect on free cash flow to stakeholders. Post assessment, equity shares were valued by our team. In addition, a normalised working capital requirement was worked out due to non-payment of ordinary commercial transactions which had a huge impact on the terminal value calculations. Subsequently, these adjustments were incorporated to value the joint venture. In this specific case, our professionals not only did an independent fair valuation analysis for the law firm but also provided advice to structure the transaction that was commercially viable and compliant with the regulatory provisions.