Detailed analysis of invoices identifies diverted opportunities and related lost profits in equipment retailer’s business acquisition

Our client’s need

A business specializing in the rental and sale of lift equipment used in the construction and railroad industries acquired a competitor, and established the acquired company as a branch operation, keeping the seller’s ownership in place to manage the branch.  Following the close of the transaction, the acquirer allegedly discovered that the seller’s ownership was diverting opportunities to another company that it owned, and which was not included in the transaction.  As a consequence, the buyer filed suit seeking damages associated with alleged breach of the non-compete provision in the purchase agreement.

Baker Tilly solution

Baker Tilly was retained by the counsel for the buyer to quantify the lost profits associated with the alleged breach of the non-compete provision. In order to quantify the damages, we analyzed hundreds of invoices generated by the competing entity, both before and after the transaction, and compared the client base and revenue activity to that of the entity that was acquired. After conducting our invoice analysis, we prepared a damage model that quantified the lost profits associated with the transactions that were diverted to the competing entity. The results of our analysis were set forth in an expert report, and we provided deposition testimony in support of our expert analysis.

Results achieved

This matter settled prior to trial on terms favorable to our client.

For more information on this topic, or to learn how Baker Tilly forensic investigation specialists can help, contact our team.