McMonagle v Harvey & Ors [2023] EWHC 2406 (Ch) (06 October 2023)

McMonagle v Harvey & Ors [2023] EWHC 2406 (Ch) (06 October 2023)

The court accepted the expert's approach to EBITDA, adjustments, and multiplier, but found that the appropriate minority discount for Mr Harvey's 25% shareholding is 15%, not 30%, because Mr McMonagle and his wife's shareholdings are effectively linked, giving him control of 50% of the company. The final share value is to be agreed based on these findings.

Citation
[2023] EWHC 2406 (Ch)
Parties
Petitioner: Timothy McMonagle; First Respondent: Lee Harvey; Second Respondent: Tracey McMonagle; Third Respondent: Maria Harvey; Fourth Respondent: Integrated Control Solutions (Eastern) Limited
Jurisdiction
England and Wales
Judgment Date
06 October 2023
Procedural Posture
Company Law Petition (unfair Prejudice) / Valuation and Quantum Determination Following Liability Judgment
Outcome
Petition allowed in part; valuation determined with directions for parties to agree final figure.
Legal Topics
Share Valuation, Minority Discount, Unfair Prejudice, Director's Loan, EBITDA Adjustment
Company Law Share Valuation Minority Discount Unfair Prejudice Director's Loan EBITDA Adjustment

Case Brief

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Parties

Timothy McMonagle

Petitioner

Lee Harvey

First Respondent

Tracey McMonagle

Second Respondent

Maria Harvey

Third Respondent

Integrated Control Solutions (Eastern) Limited

Fourth Respondent

Procedural Posture

Company Law Petition (unfair Prejudice) / Valuation and Quantum Determination Following Liability Judgment

Legal Issues

  1. 1 What is the fair value of Mr Harvey's 25% shareholding in Integrated Control Solutions (Eastern) Limited?
  2. 2 What is the appropriate minority discount to apply?
  3. 3 Are adjustments to EBITDA, VAT, warranty provisions, bad debts, and director's loan justified in the valuation?

Ratio Decidendi

The court accepted the expert's approach to EBITDA, adjustments, and multiplier, but found that the appropriate minority discount for Mr Harvey's 25% shareholding is 15%, not 30%, because Mr McMonagle and his wife's shareholdings are effectively linked, giving him control of 50% of the company. The final share value is to be agreed based on these findings.

Court Disposition

Petition allowed in part; valuation determined with directions for parties to agree final figure.

Orders

  • Mr McMonagle to purchase Mr Harvey's 25% shareholding at a value reflecting a 15% minority discount, as determined by the court's findings and the expert's methodology.
  • Parties to agree the final figure with the assistance of the expert if necessary.