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If you run a business, the economic cost of an unlawful act may put you out of business. For instance, a breach of contract could impact your business. Lost profit is often the most appropriate way to measure commercial damages. Other measures of commercial damage include lost value, unjust enrichment, contract damages, fraudulent conveyance (in the case of bankruptcy), and reasonable royalties (in the case of intellectual property). They are all means of measuring the damages you may be entitled to, or the amount of money to be paid to you as compensation for your loss. Economic damages and lost profit analysis techniques used include the before-and-after method. To measure the economic cost of the interruption to your business, estimate your lost revenue versus the savings in cost when your business has been interrupted. Before-And-After Method Some expenses like equipment leases, rent, and interest will probably continue to be incurred during this period. Others, like commissions paid to sales staff will not be incurred. There may be additional expenses associated with the interruption of your business. You may have expenses related to renting a temporary facility. Or you could have costs related to fixing the cause of the business interruption. Deduct these from the expenses saved to arrive at your net expenses saved figure. Subtract this in turn from your lost revenue to determine your lost profits for a given period. This should be done by an expert so that you know where you stand before you go to court. Discounting of these figures to present value and mitigation also need to be done. The date for doing the discounting may differ. In some cases it could be the date from interruption of business. In others, it could be the date from the start of court proceedings. Prejudgment interest would vary in amount accordingly. Other Methods In the yardstick or comparable company method, similar companies or industries that can be compared to yours are identified. The information about their profits is used to project your profits by an expert. He or she may use this method if no historical information related to your company is available. Variables relating to your company, the industry your business belongs to, and the overall economy also need to be considered in economic damages and lost profit analysis. Choose an accredited, experienced, and knowledgeable expert. He or she should use up to date methods and interact with you in a timely, responsive manner. The BVA Group can meet your economic damages and lost profit analysis needs, as this area is their core expertise. Contact them today for an appointment! Lost profits analysis is a core expertise of The BVA Group.
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economic damage, economic damages, lost profit, lost profits,
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