12.9 Conclusion

In this book, valuation has been combined with various aspects of Dutch corporate and insolvency law, especially in respect of Dutch corporate law proceedings and financial restructurings by means of a pre-insolvency scheme-like mechanism. The valuation literature that has been well developed in the U.S. does also apply to matters of valuation in the Dutch legal landscape. The saying goes that “valuation is an art, not a science”. Because it is so arbitrary and because value is in the eye of the beholder, it is of the essence to be as clear as possible about what kind of value is being estimated. Especially since parties with deviating legal and economic interests are fighting about the valuation of an asset in court, it is crucial that the valuation context is described in great detail. In the Netherlands there is no clear transparent theoretical framework for the valuation used in legal proceedings. An independent expert, most of the time a corporate finance banker, consultant or accountant is requested to perform a valuation analysis and present his valuation report in court. The definition of value used as a starting point for such an analysis may differ. And as indicated, it does matter whether somebody is analyzing the highest (theoretical) bid or, just, the fair market value. It does also matter whether one is analyzing a transaction value or only the value for a selling shareholder. Because of all the above, in my view, I believe we should no longer use all kind of descriptions about the value, like the true, or economic, or real, or fair value of an asset. I would suggest to simply refer to “the value” and to use a detailed framework in order to conclude what kind of value, for whom, for what purpose, is being calculated. This means that the expert, backed by the attorneys or the judge, if applicable, should use a framework with the following questions:

In this book I combined finance with the legal science, more specifically the financial-economic perspective about enterprise and equity valuation and the Dutch legal proceedings in which valuation can be an element of discussion. Because in those legal proceedings, and also in respect of the pre-insolvency schemes (which will hopefully be introduced in the near future in the Netherlands), the parties involved will have contrary interests and, accordingly, different opinions about the valuation. Since there is at the moment no transparent approach for calculating the value, I introduced a valuation framework. Hopefully, using and further optimizing such a framework in practice (either because of further development in legal literature or in legal proceedings) will contribute to less miscommunication between corporate finance practitioners and attorneys and other legal consultants and thus ultimately to a valuation approach which is less open to debate.