Research grant to achieve more clarity on business valuations in the courtroom
Marc Broekema from the Department of Business Studies has received a grant from the Netherlands Institute of Registered Valuators (NiRV) to conduct research into how the value of a business is assessed in legal proceedings.
Dr Broekema will lead the research project over the next two years. He will conduct research within the legal profession and judiciary, as well as among business owners, managers and valuation experts. These parties are all involved in drawing up valuation reports that establish the value of a business. He explains: ‘A valuation expert is a financial expert who is specialised in assessing a business’ value. They are used in cases involving company acquisitions, disputes, bankruptcy and claim calculations.’
Lack of clarity and conflict
'For outsiders, it’s often hard to understand how the value of a company is assessed', Broekema continues. 'They ask what assumptions are used and how the valuation report is arrived at. That’s why it’s so important that we study the expectations in relation to the main aspects of valuations and the problem areas encountered when valuation reports come before the courts.'
‘Currently, the Netherlands does not have a generally accepted protocol setting out the conditions that valuation reports must meet.’
Clear expectations
The NiRV and professional valuation experts would also benefit from more clarity when it comes to establishing a business’ value and the subsequent reports. Broekema says, 'Valuation experts face criticism for their reports and sometimes they’re even held liable for their findings. Reports can be criticised in terms of their structure, content and how the valuation process was conducted, for example. Those criticisms can even result in disciplinary proceedings at the NiRV, which puts the experts under mental strain.'
A workable protocol
'In addition, litigants, lawyers and judges are often unaware about what the valuation process involves and the requirements that it has to fulfil', says Broekema. 'Currently, the Netherlands does not have a generally accepted protocol setting out the conditions that valuation reports must meet. Through our research, we want to develop a workable protocol. Over the course of 2025, we hope to be able to finalise the results and publish a free handbook for everyone involved.'
Foto's through Unsplash.