In 2016, a British power equipment manufacturer terminated a 20-year-long distribution agreement with its distributor for Southern Europe. Following the termination of the distribution agreement, the Distributor presented a multi-million-euro claim against the Manufacturer. It alleged that the termination was unlawful and requested compensation for the loss of the value of its distribution business.

Counsel for the Manufacturer retained NERA’s Managing Director Dr. Richard Hern and former Associate Director Clara Segurola to provide expert testimony on the losses to the Distributor arising from the termination of the distribution agreement.  

NERA’s team provided an analysis and critique of the claimant’s methodology for assessing lost profits, which included a business valuation using the discounted cash flow method and the multiples valuation method. NERA’s analysis identified a number of major errors in the claimant’s valuation of the distribution business. It also showed that, correcting for these errors, the value of the distribution business was 10 times lower than the value assessed by the claimant’s expert. In addition, in their report, NERA’s experts argued that the distribution business had retained some value after the termination of the distribution agreement and, therefore, compensation should not be equal to the full value of the business, as the claimant argued.

Ms. Segurola provided oral testimony at hearings in Madrid. The court ruled in favor of the Manufacturer and dismissed all claims presented by the Distributor.