"The right thing at the wrong time is the wrong thing" is a quote which strikes a chord when considering the date of valuation in disputes. This article focuses on the importance of date for the commonly used valuation method of discounted cashflow.
Cashflow profiles utilised in calculations are highly dependent upon the assumptions made. If opposing experts are instructed to use different valuation dates (or other key assumptions), the cashflows used are likely to vary greatly, which can result in significant variances in the net present value calculated by the opposing experts.
A discounted cashflow (DCF) could well be a useful tool for valuations. However, if the starting point is not appropriate for the circumstances of the claim, it is unlikely to have success in front of a tribunal. With the increasing use of DCF calculations in disputes, it is crucial that experts are making appropriate assumptions, as this briefing explains.