Valuation at the Heart of Shareholder Disputes

When ownership interests are in dispute, valuation becomes the foundation on which legal strategies are built. Without an accurate, defensible figure for what a company is worth, negotiations can stall, litigation can drag on, and outcomes can be inequitable.

This was the focus of a recent podcast from IR Global, where our President and Founder, Nevin Sanli, joined Kyle Broadhurst of Broadhurst LLC, based in the Cayman Islands. Together, they explored how valuation expertise and legal strategy intersect in shareholder disputes, and how international collaboration can help resolve even the most complex cases.

How Disagreements Arise

Shareholder disagreements over value can emerge in a variety of ways. Sometimes they are part of an amicable buyout where the parties simply need to agree on price. In other cases, they form the heart of litigation, such as in mergers or consolidations where minority shareholders have statutory rights to challenge the offer. Valuation also plays a critical role in divorce proceedings involving business interests or in situations where a shareholder alleges unfair treatment and seeks to have their interest purchased instead of winding up the company.

Fair Value vs. Market Value

In the Cayman Islands, for example, minority shareholders can seek a determination of “fair value” under Section 238 of the Companies Act - a figure that often differs significantly from “fair market value” because it typically excludes certain discounts for lack of control or marketability. While attorneys guide their clients through the legal process, our role is to provide the rigorous, objective financial analysis that informs those remedies.

Building a Defensible Valuation

When engaged in a shareholder dispute, our first priority is to develop a thorough understanding of the business; its operations, financial history, market position, and future prospects. We apply established valuation methodologies such as the income approach, which assesses the present value of future earnings, the market approach, which benchmarks the business against comparable transactions or companies, and the asset approach, which determines the value of physical and intangible assets directly. Where necessary, we also conduct detailed forensic accounting to verify that reported figures accurately reflect the company’s economic reality. This can mean uncovering non-operating expenses, adjusting for owner-specific benefits, or identifying unreported revenue streams.

The Importance of Cross-Border Collaboration

Many of the disputes we work on involve companies incorporated outside the United States, including in the Cayman Islands. These cases require not only technical valuation expertise but also a clear understanding of jurisdiction-specific legal frameworks. Our collaboration with Broadhurst LLC is a prime example of how cross-border partnerships can deliver better outcomes for clients. By aligning our financial analysis with their knowledge of Cayman law, we create a coordinated strategy that ensures the valuation supports the legal objectives from the outset.

Early Engagement Improves Outcomes

We encourage early engagement in the valuation process. A credible, data-driven analysis at the beginning of a dispute can help attorneys shape their case, narrow the scope of litigation, and improve the chances of a negotiated settlement. In many situations, having the right valuation early can mean the difference between a prolonged, contentious dispute and a fair, efficient resolution.

Delivering Clarity and Credibility

At Sanli Pastore & Hill, our mission is to bring clarity, precision, and credibility to the financial side of shareholder disputes. Whether the matter proceeds through mediation, arbitration, or trial, we provide valuations that withstand scrutiny, because in these cases, the numbers do more than inform the process; they define the outcome.

To learn more, you can listen to the full podcast episode on Spotify, or contact Nevin at nsanli@sphvalue.com.