Hazlewoods Forensics Accounting and Valuations team

Hazlewoods Forensic Accounting

Chrissy Wilkinson, Partner and Charlotte Okninski, Director, have joined Hazlewoods Forensic Accounting and Valuations team, expanding the offerings for clients across the UK. With nearly 40 years combined experience, these two senior appointments bring a wealth of experience, with particular expertise in Sale and Purchase Agreement (SPA) advisory, SPA dispute resolution, expert determination and valuations to the team.

SPA advisory and dispute resolution

Chrissy specialises in accounting related disputes and enquiries with a particular interest in M&A disputes. Sale and Purchase Agreements (SPAs) often involve complex financial mechanisms that can lead to disputes postcompletion. As forensic accountants we provide expert support, acting as the independent expert determiner, expert witness, or a party adviser, to help resolve these issues efficiently and fairly. Drawing from the knowledge and experience of SPA mechanics derived from assisting in 100s of successful deals and applying a deep understanding of accounting standards, our SPA advisory services help clients achieve fair resolutions, minimise risk and protect value in transactions.

Key trends shaping SPA disputes in today’s market are:

1. The rise of completion account disputes in a volatile economy

During times of economic uncertainty, completion accounts are increasingly preferred over locked box mechanisms. Completion accounts allow adjustments to be made to the purchase price post completion, however unclear accounting hierarchies or poor drafting of definitions can lead to ambiguity and hence post-completion disagreements.

2. Earn-out mechanisms under pressure

Whilst earn-outs remain popular for bridging valuation gaps between parties, allowing for part of the purchase consideration to be deferred and be dependent upon results achieved post completion, disputes over subjective performance metrics and GAAP interpretations are increasing. The mechanisms can be complex and may trigger accounting consequences not considered at the time of drafting the SPA.

3. Increased risk as a result of accelerated deal timelines

Rushed transactions and compressed timelines, driven by market pressures or because both parties are eager to lock in headline terms, often mean incomplete due diligence, vague definitions and broad warranties. The rush can be costly, and risks that are missed pre deal, often resurface later as disputed items.

4. ESG & regulatory complexity

ESG is now a core due diligence area, influencing deal terms and risk allocation. New ESG obligations and regulatory changes are increasingly shaping warranties, indemnities, and valuation mechanisms in SPAs. Buyers demand warranties covering ESG compliance or emerging regulations and breaches of ESG warranties can lead to significant claims, as non-compliance may trigger regulatory penalties or reputational harm.

Expert Determination

Chrissy and Charlotte have extensive experience of expert determination as a mechanism for resolving disputes under SPAs, particularly those involving technical accounting issues such as completion accounts and earnout calculations. As the independent expert, we interpret the accounting provisions of the SPA and apply them to the financial data.

The expert determination procedure is agreed between the independent expert and the parties. To ensure an efficient process, it important to ensure the timetable for submissions and their review are reasonable and achievable by all involved. In addition to the flexibility of the process, allowing for parties to tailor the procedure and timetable to their specific needs, some of the key advantages of a well structured expert determination are:

Confidential process – resolution in private protecting a company’s reputation and sensitive information

Quicker and more cost-effective compared to litigation or arbitration

Outcome determined by an independent expert with specialist knowledge (whom the parties can choose)

Determination report provides the reasons for the decision of each dispute item (if required)

Final and binding on the parties, and therefore provides certainty of the outcome

and Valuations team

Valuations

Charlotte specialises in share and business valuations.

An objective, evidence-based assessment of the value of the business can be crucial in resolving the following types of dispute:

Equitable division of assets – in matrimonial cases, the court needs an accurate valuation of any shareholdings to ensure a fair division of marital assets.

Shareholder and partnership disputes – when owners disagree, valuations help them to determine the appropriate price at which to buy/sell the relevant shares.

Post-transaction and contractual disputes – courts rely on valuations to assess claims relating to breaches of warranties or misrepresentations in deals.

Damages and compensation – in commercial litigation, valuations quantify financial loss or damages relating from wrongful acts, such as breach of contract or negligence.

Insolvency and bankruptcy proceedings – valuations establish the value of assets for liquidation or restructuring, ensuring creditors and stakeholders are treated fairly.

Key challenges for valuations today

Valuation has become central to resolving high-stakes disputes — divorce, shareholder oppression, post-deal claims, and damages compensation. Courts increasingly demand robust, transparent methodologies, and are sceptical of speculative projections or opaque adjustments. The following challenges are present for valuations today:

1. Dating and the use of hindsight

Establishing the date of the valuation is critical in all cases. Some cases require an assessment of the value at multiple historical dates depending on the nature of the case.

Care must be given to avoid the use of hindsight. The valuation opinion should be based on the facts known or knowable at the valuation date.

2. Identifying the basis of value required

“Value” is a measure of the worth or benefit that an asset provides to a particular person or in a specific context. It is vital to establish what type of value is required. For example, courts often request a “market value” or a “fair market value”, which may differ to the value a current shareholder or a potential investor may enjoy.

3. Data quality and availability

Privately owned companies, particularly those that are smaller in size, often lack the robust forecasts required to perform certain valuation techniques (e.g. discounted cash flow). In addition, market data used for benchmarking appropriate multiples or discount rate inputs can be outdated. On occasion, the valuer may receive conflicting information from the parties and needs to deal with such with their duty to the court in mind, for example, considering the different conclusions that could be drawn from different data sets.

4. Economic volatility

Persistent inflation, higher interest rates and volatile risk premia are making discount rate inputs and growth rates more volatile. This can also impact market multiples as markets respond to pricing shocks in the short term.

5. Integration of ESG and new risk factors

Valuations must now factor in elements like ESG compliance, supply chain resistance and regulatory risk, broadening traditional financial models.

6. Scrutiny over discounts

The application of discounts for lack of control or marketability can have a significant impact on the final valuation. The discount for lack of marketability (“DLOM”), in particular, has been the subject of scrutiny in many high-profile cases and remain best considered on a case-by-case basis.

At its most straight forward, it is presented as an arbitrary or illustrative discount to the valuation, which lacks robust support. At its most complex it can involve considering empirical data such as restricted stock studies or pre-initial public offering studies or using option pricing models. There is no ‘one-size fits all’ approach, any DLOM should be considered on a case-by-case basis and supported with appropriate evidence.

Summary

Chrissy and Charlotte would be delighted to discuss any queries you might have in relation to the above, or any other forensic accounting or valuation matters.

Chrissy Wilkinson

chrissy.wilkinson@hazlewoods.co.uk

Charlotte Okninski

charlotte.okninski@hazlewoods.co.uk