Our audit team undertakes the complete range of audits required of Australian accounting laws to help you to help you meet obligations or fulfil best practice procedures.
It is a challenging time for many; from a cost-of-living crisis and global political uncertainty, to lingering stress post pandemic. Coupled with business control weaknesses or vulnerabilities, these pressures can create the perfect storm for financial crime to occur.
We help clients understand and address their employment tax obligations to ensure compliance and optimal tax positioning for their business and employees.
The ATO has tightened exemption criteria for country-by-country reporting, effective January 1, 2024. Taxpayers will need to submit more information, aligning with the ATO's focus on international tax risks and local file reporting.
We provide independent oversight and review of your organisation's control environments to manage key risks, inform good decision-making and improve performance.
We enable our clients to achieve their strategic objectives, fulfil their purpose and live their values supported by effective and appropriate risk management.
In the latest episode of Beyond the Numbers with Grant Thornton, our Brisbane Office Chair and Tax Partner Sian Sinclair and Risk Consulting Partner Jarrod Lean discuss opportunities, challenges, procurement risks and strategies.
Our forensics team identifies and obtains relevant information, investigates the financial issue at hand and provides a clear, concise, sustainable opinion as...
Our team advises at all stages of a litigation dispute, taking an independent view while gathering and reviewing evidence and contributing to expert reports.
Our M&A team works with clients to achieve a full or partial sale of their business, to ensure achievement of strategic ambitions and optimal outcomes for stakeholders.
Our operational deal services team helps to ensure the greatest possible outcome and value is gained through post merger integration or post acquisition integration.
As environmental, social, and governance (ESG) considerations become increasingly pivotal for dealmakers in Australia, it is important for investors to feel confident in assessing transactions through an ESG lens.
On 10 October 2024 the Treasury Laws Amendment (Mergers and Acquisitions Reform) Bill 2024 (the Bill) was tabled in the Australian Parliament in an effort to overhaul Australia’s mergers and acquisition laws. The bill was passed by both houses of Parliament on 28 November 2024.
Our finance and funding team works to access sources of finance, present your case to potential funders and negotiate a long-term sustainable relationship.
We provide effective and strategic corporate finance services across all stages of investments and transactions so clients can better manage costs and maximise returns.
We work closely with clients and lenders to provide holistic debt advisory services so you can raise or manage existing debt to meet your strategic goals.
Our proven methodology identifies opportunities to improve your processes and optimise working capital, and we work with to implement changes and monitor their effectiveness.
Merger & Acquisition (M&A) and equity market activity in the Agribusiness, Food & Beverage (Ag, F&B) sector is undergoing a strategic shift, as investors have become more selective and increasingly cautious in response to global economic uncertainty.
Our insolvency teams takes a proactive approach so our clients have access to more business turnaround options and retain the most value for all stakeholders.
Rising costs, supply chain disruptions, and shifting consumer behaviour are pushing many retailers to the edge. Taking immediate action to reduce operational expenses and prioritise cash flow management can give businesses the breathing room they need. Retailers must adapt quickly to survive these challenging market conditions and avoid insolvencies.
We help clients improve commercial performance, profitability and address challenges after internal or external triggers require a major business model shift.
We provide strategic director advisory services in times of business distress to help directors navigate issues and protect their company and themselves from liability.
We work closely with clients and lenders to provide holistic debt advisory services so you can raise or manage existing debt to meet your strategic goals.
Rising costs, supply chain disruptions, and shifting consumer behaviour are pushing many retailers to the edge. Taking immediate action to reduce operational expenses and prioritise cash flow management can give businesses the breathing room they need. Retailers must adapt quickly to survive these challenging market conditions and avoid insolvencies.
We work with private businesses across Australia – and internationals looking to Australia for their investments and operations – on all accounting and...
Our outsourced CFO services provide a full suite of CFO, tax and finance services and advice to help clients manage risk, optimise operations and grow.
Having a considered and informed ESG response has never been more important for all organisations as we are seeing awareness of the elements of ESG continue to...
There is a growing demand for organisations to provide transparency on their commitment to sustainability and disclosure of the nonfinancial impacts of their business activities. Commonly, the responsibility for sustainability and ESG reporting is landing with CFOs and finance teams, requiring a reassessment of a range of reporting processes and controls.
With the ESG and sustainability landscape continuing to evolve, we are focussed on helping your business to understand what ESG and sustainability represents and the opportunities and challenges it can provide.
As the demand for organisations to prepare information in relation to ESG & sustainability continues to increase, through changes in regulatory requirements or stakeholder expectations, there is a growing need for assurance over the information prepared.
As environmental, social, and governance (ESG) considerations become increasingly pivotal for dealmakers in Australia, it is important for investors to feel confident in assessing transactions through an ESG lens.
Money and finances can often be a sensitive and discreet topic in families, but what about families that own and operate a family business? Discussions about money can often begin around the dinner table, with even very young children receiving pocket money in exchange for chores.
Investment and business opportunities in Vietnam are expanding rapidly, driven by new markets, diverse industries, and Vietnam's growing role in export manufacturing, foreign investment, and strong domestic demand.
Treasury is taking steps to ensure fairer tax treatment for foreign resident investors by tightening Australia's foreign resident Capital Gains Tax (CGT) regime. Proposed changes aim to broaden the CGT base and enhance integrity, impacting infrastructure, energy, agriculture, and more.
Merger & Acquisition (M&A) and equity market activity in the Agribusiness, Food & Beverage (Ag, F&B) sector is undergoing a strategic shift, as investors have become more selective and increasingly cautious in response to global economic uncertainty.
Treasury is taking steps to ensure fairer tax treatment for foreign resident investors by tightening Australia's foreign resident Capital Gains Tax (CGT) regime. Proposed changes aim to broaden the CGT base and enhance integrity, impacting infrastructure, energy, agriculture, and more.
Following the recent removal of tariffs on Australian wine by China, the industry is keen to rebuild relations and explore the right export markets. This presents Australian wine producers with a chance to reassess their position in the global market.
From an active natural resources M&A market, a growing energy and renewable energy market, to new technologies and export and trade agreements – we have the...
At Grant Thornton we do things differently because we understand that when you strive for better and care about what you do remarkable things are possible.
The compelling client experience we’re passionate about creating at Grant Thornton can only be achieved through our people. We’ll encourage you to influence how, when and where you work, and take control of your time.
At Grant Thornton, we strive to create a culture of continuous learning and growth. Throughout every stage of your career, you’ll to be encouraged and supported to seize opportunities and reach your full potential.
To be able to reach your remarkable, we understand that you need to feel connected and respected as your authentic self – so we listen and strive for deeper understanding of what belonging means.
We’re passionate about making a difference in our communities. Through our sustainability and community engagement initiatives, we aim to contribute to society by creating lasting benefits that empower others to thrive.
As a new graduate, we aim to provide you more than just your ‘traditional’ graduate program; instead we kick start your career as an Associate and support you to turn theory into practice.
In the recent decision ofMignone & Barton [2024] FedCFamC2F 344, the Court found that as Mr XX valued the business at $437,000, the value of the Wife’s 50 per cent share was $218,500.
This simplistic view is all too common, where lawyers, accountants and even business valuers ignore discounts that can apply to when a company is not wholly owned.
Two discounts regularly applied in the valuation of a private company are:
Discount for lack of control
Discount for lack of marketability
Discount for lack of control (DLOC)
A discount for lack of control can apply when the ability of a shareholder to influence management and/or control of the company is encumbered having regard to the corporate documentation.
For example, a company’s constitution and/or shareholder’s agreement may prevent a shareholder holding a certain level of shares the ability to influence the operations of the company including the appointment of Directors, the payment of dividends, the sale of assets or winding up of the company.
Other common considerations under can include:
the proceedings of Directors meetings
the ability of a Party to approve and/or block special resolutions
the ability of a Party to control the capital structure of the Company including issuing new shares or classes of shares, repurchasing outstanding shares or registering the company for an IPO
the ability of a Party to decide on remuneration levels for employees, directors & officers
the ability of a Party to enter contractual relationships with customers and/or suppliers
the ability of a Party to conduct acquisitions/divest of businesses, divisions, assets
the ability of a Party to decide on capital expenditure programs
the ability of a Party to select the company’s strategy (including restructuring)
the ability of a Party to veto or block any of the above actions
In relation to discount for lack of control of minority interests (shareholdings of 50 per cent or less), general control premium studies can provide supporting evidence as to the appropriate size of the discount.
However, the size of the discount will also depend on the interest of the stakeholder and the interest of the other shareholders, particularly where there is one shareholder that exerts significant control over the company.
Discount for lack of marketability (DLOM)
A discount for lack of marketability is distinctly different in that the shareholder may be able to sell their shareholding however, there may be a limited number of potential buyers. A discount such as this is to recognise the impediments associated for a willing seller who may not be able to easily convert their minority shareholding into cash.
Common considerations can include:
the relative size of the parcel to other shareholders
transfer restrictions set out in corporate documentation (in particular pre-emptive and tag along/drag along rights)
the dividend history of the company
the underlying assets of the company
the voting rights (or restrictions) associated with the shares held by the shareholder
In a public company context, thinly traded listed shares are an example where a discount for lack of marketability may be applied. This occurs when a shareholder holds a significant number of shares in a listed entity, but due to the lack of trading volume it may take the shareholder a considerable length of time to sell the parcel of shares, or where placing the entire holding onto the market is likely to see a reduction in the value of the listed shares.
There may be times where one, both or neither of DLOC / DLOM are appropriate when valuing an interest in a company and you should always seek expert advice when it comes to these issues in any litigation scenario.
In the matter of Rowland & Rowland [2024] FedCFamC2F 7, the Court explored the reasonableness of the implied discount in the value of the shares held by the husband.
The key facts of the matter were as follows:
In December 2022, the single expert estimated that the equity value of L Pty Ltd as at 30 June 2022 was $2,243,889. Accordingly, the husband’s 36.5 per cent interest in L Pty Ltd was valued at $819,019.
In early 2023, the L Pty Ltd partners essentially terminated the husband’s employment. He was walked off the premises and locked out of the business.
On the same day, the husband advised the wife through legal correspondence that he was negotiating to sell his share in L Pty Ltd ‘per the shareholder agreement’.
In March 2023, the husband received a letter from the L Pty Ltd partners containing a proposal to buy out his shares in L Pty Ltd. For the purposes of negotiations, reference was made, and reliance placed on the ‘court valuation’.
In June 2023, the husband entered into a share sale deed for his L Pty Ltd shares for consideration of $450,000, a discount of approximately 45 per cent on the pro-rata value ascribed by the single expert.
Under cross-examination, the single expert conceded that his valuation did not apply a discount for the husband’s minority shareholding, but it would be reasonable to do so because of the lack of control he was able to exert, especially where the shareholders were not ‘blood-related’ parties. The Court stated that this lack of control of the husband was highlighted by the negotiation process he engaged in.
The Court found that:
I am satisfied that the correspondence between the legal representative for the husband and the L Pty Ltd partners indicates that the negotiations were undertaken in good faith and were bona fide. The negotiations had regard for both the terms of the Shareholder’s Agreement and referred to the Business Valuation Report.
I am unable to conclude that the husband embarked upon a course of conduct designed to reduce or minimise the effective value or worth of the matrimonial assets. Nor am I satisfied that in selling his share, the husband acted recklessly, negligently, or wantonly. [81 – 87]
In so doing, the Court agreed with the ‘discount’ on the pro rata value negotiated by the husband. This decision provides ‘real-life’ evidence for business valuation professionals regarding the concept of discounts and the interplay with the acquisition of one party’s interest.
We’re here to help
If you need assistance with a business valuation in your dispute, please reach out to our team of experts today.
Learn more about how our Forensics services can help you
In the latest episode of Beyond the Numbers with Grant Thornton, Partner & National Head of Forensic Consulting Alex Bell and Management Consulting Partner Chris Wong talk through the importance of independent payroll remediation reviews.
Subscribe now to be kept up-to-date with timely and relevant insights, unique to the nature of your business, your areas of interest and the industry in which you operate.
