Lost profits analysis applied to partnership and shareholder dispute litigation: methodology, deliverables, and case-specific considerations.
In a partnership or shareholder dispute a lost profits claim arises when one owner's conduct, such as diverting customers, competing with the business, or excluding a partner from its earnings, reduced the profits the business or the excluded owner would otherwise have received. The economist establishes the but-for profits from the company's history and market, links the shortfall to the conduct at issue, quantifies diverted revenue from the ledger and customer records, and presents the owner's share of the lost profits by year. The analysis is coordinated with any valuation of the interest so the same loss is not counted in both.
Lost profits and related commercial damages for contract, business-tort, and business-interruption matters. The analysis builds the but-for revenue and cost path from the company's own history, its market, and the terms of the disputed relationship, links each claimed loss to the conduct at issue, addresses mitigation, and reasons through the period of loss so the damages figure answers the causation question as well as the amount.
Depending on the claim, the analysis consists of the fair value or fair market value of the ownership interest as of the relevant date, the difference between what the departing owner received and what the interest was worth, distributions or profits diverted through excess compensation, related-party transactions, or unrecorded revenue, and lost profits to the business or to the owner when the conduct at issue reduced earnings. The drivers are the operating agreement or shareholder agreement and its buyout terms, historical financial statements and tax returns, the general ledger, compensation and distribution records, and documentation of transactions with related entities.
We issue the final report and provide deposition and trial testimony and rebuttal of opposing damages models.
From the ledger, bank records, and customer and pricing records: the economist identifies the revenue that moved to the competing entity or was taken through excess compensation and related-party payments, and summarizes the amounts by year and recipient with each figure tied to a document.
Both can be measured, but for different periods or different harms. The report explains which measure applies to which period so the claim does not count the same earnings twice.
Request a consultation on Lost Profits or call (201) 343-0700. Plaintiff and defense counsel.