Lost or diminished profits can be categorized as either a business damage claim or an economic damage claim. In a business damage claim, the business experiences diminished profits generally as a result of an alleged action against the business. Economic damage claims involve calculating the amount of future lost profits or the lost value of the business.
Calculating lost profits involves forecasting income cash flows and converting them to present value. Damages are usually the difference between what the plaintiff would have expected to receive had the alleged wrongful act never been committed and the actual profits that the business did receive. This calculation includes looking at historical profits as well as future projections.
The valuation of a business or its assets calls for a combination of science, art, and experience. The business valuation experts at Sage Forensic Accounting offer a comprehensive analysis to provide you with a precise and defensible business valuation report. Our professionals offer practical insight into the strategic, economic, and active affairs of the business, so you can understand the accurate value regardless of the industry.
A business interruption can be either an anticipated or unanticipated disruption of normal company operations. When a business interruption loss reaches a certain level in value or complexity, adjusters turn to forensic accountants to clarify the financial picture and assist in evaluating a fair outcome for the insured and their insurance company. Once it is determined the claim requires this type of expertise, it is optimal to bring in a forensic accountant to join the insurance team as early as possible to consider the financial implications within the claim. Sage Forensic Accounting will work with both the adjuster and the insured to assess the claim, evaluate all of the business factors that will impact the financial picture, and help set the direction for the ultimate resolution.
As the damage of a business interruption increases, claims management is frequently hampered by the loss or destruction of financial and business data and records. In these events of missing financial data, it is crucial that a forensic accountant be brought in to identify other processes for determining a business’s financial information. Looking at both the facts and the context of the business that has been interrupted, Sage will establish a defensible and accurate calculation of the financial impact for the adjuster and the insured.
The practical and strategic implications of valuation play a vital role throughout the bankruptcy process. Some of the most critical areas of valuation during the process include: adequate protection, fraudulent transfer, plan confirmation, new value, and recovery actions.
Sage Forensic Accounting has considerable experience assisting clients in performing valuations in conjunction with bankruptcy proceedings.
