When parties have a conflict about the value of a company, they sometimes go to court for a ruling. Such court proceedings are costly and time-consuming. In this expert contribution, we present an efficient alternative that allows parties to reach a solution themselves: mediation.
Conflicts about company value often arise when the value has to be divided or settled. For example, in a divorce or when one shareholder has to offer his shares to another. Determining the enterprise value is complex, so parties usually cannot reach a mutual agreement.
They can then go to court, which then hires an expert to give a binding opinion on the value of the business. This expert must examine the business extensively, which makes the process costly and time-consuming.
Mediation as a solution
Mediation is a form of conflict mediation, where parties try to reach a solution together under the guidance of a mediator.
Mediation is a good alternative to court proceedings. A major advantage is that the conflict is resolved quickly and efficiently. And just as important; the outcome is determined by the parties themselves and not by a third party. This is conducive to maintaining the relationship.
How does the mediation process work?
Mediation consists of conversations between the parties and the mediator. The mediator guides the process and ensures that both parties can tell their story. Together with the parties, the mediator looks for suitable solutions. This can involve a wide variety of schools of thought.
An important distinction between court proceedings and mediation is that participation is voluntary. Also, the parties can leave the mediation process at any time. However, both parties must have the intention to come out of it together. There is an obligation of effort, meaning they must actively work to find a solution.
The final result of the mediation procedure is laid down in a settlement agreement. This agreement is legally binding and enforceable.
Mediation combined with valuation expertise
In a conflict about company value, it is good to engage a mediator who is also a valuation expert (Register Valuator). Because of his expertise, he can serve as a source of questions and save parties from making big mistakes. Experience shows that 90% of the parties reach a solution within four sessions. Should the mediation process fail in exceptional cases, the parties can still use this mediator to give a binding opinion.
The advantages at a glance:
- Efficient and fast: a solution within an average of four sessions.
- Process in your own hands: the parties have great influence on the process and its costs. They declare their intention to reach a solution together, but can always decide to drop out of the process.
- Possibility of own adviser: the parties can be assisted by their own adviser. They are free to choose who that is.
Suitable for whom?
This method is suitable for both large and small financial interests. One condition is that the parties respect each other's interests and are motivated to find a solution together. The preservation of the relationship should be more important than a legal settlement.
