Providing a valuation for a client involved in a commercial dispute with a JV partner

Ensors were recently engaged to assist in a commercial dispute between a client and an international partner in a joint venture business involving a bio-energy sector generator.

Acting as the party expert for the respondent, our role involved providing a discounted cash flow valuation of the joint venture and analysing the receipts and payments which had been recorded in recent years. The business had a multi-million pound value and was valued on two scenarios – with optimisation of plant and without. We also looked at whether optimisation required a further investment from the JV.

Ensors work included a review of the bank statements to calculate the investment from the claimant and our report was in an expert format which could be used in Court. To undertake a discounted cash flow valuation we reviewed the results of the joint venture to establish its free cash flow.

We also calculated a discount rate using the Capital Asset Pricing Model to arrive at the Enterprise Value of the JV. (To use the Capital Asset Pricing Model we needed to find an appropriate risk free rate, equity risk premium and Beta of the market.) Meanwhile, adjustments based on the balance sheet were processed to calculate the overall Equity Value of the JV.

The matter was settled at mediation-our report gave our client a balanced view to inform their decision and the assignment was delivered within 2 weeks of instruction.