Case Studies

FAILED SOFTWARE IMPLEMENTATION

This matter involves a dispute between a leading television and internet seller of jewelry and a software company.

Accumyn was asked to review and opine on the damages suffered by the jewelry seller as a result of the failed software implementation.  Accumyn determined the jewelry seller’s out-of-pocket costs and extra-expenses incurred as a result of failed software implementation. This included payments to the software company, as well to the other third-party vendors. This involved a determination of the value of the benefit received, if any, for each of these payments. Accumyn also determined the internal labor costs incurred by the jewelry seller in order to ameliorate the damage from the failed software implementation.

The assignment also involved the preparation of five lost profit models to determine the damages suffered by the jewelry seller as a result of various delays in obtaining functionalities that had been promised by the software company. Five additional lost profit models were prepared to determine the damages suffered by the jewelry seller as a result of internal projects that were also delayed as a result of the failed software implementation. These analyses involved determination of the expected incremental profits the jewelry seller would have experienced, if not for these delay periods.

Scott Bayley provided two expert reports and trial testimony in support of his opinions.

Authoritative Valuation of Successful Haute Couture Fashion Company

Accumyn’s team of economists and valuation professionals valued a successful haute couture fashion company. A start-up designer teamed up with a pair of Houston-based investors and fashion industry experts to secure funding. In the first year, sales to retail stores reached seven figures.   However, as soon as orders for the second season were booked, the designer no longer wanted the involvement of her Houston partners. The designer backed away from her commitments to them, cutting off further involvement and breaking away to form a separate company that continues to flourish, with worldwide sales of eight figures.

On behalf of the Houston partners, who wished to realize the full value of their ownership interest, Accumyn prepared a detailed valuation analysis of the original company, as of the time the designer broke away. Using a Fair Value standard, the amount that compensates an owner involuntarily deprived of property, and presuming that the company had gone forward with the involvement of the Houston partners as intended, Accumyn reached a conclusion on the value of the company, under both an income approach and a market approach.

Analysis of Federal Employee’s Pecuniary Damages from an Auto Pedestrian Accident

Accumyn prepared a detailed damage analysis for an employee of the U.S. Department of Homeland Security who was severely injured after being struck by a bus while attempting to cross a downtown intersection.   The testimony of a medical expert established that the injuries sustained from the accident hastened a pre-existing kidney disease, requiring a premature kidney transplant and reducing the individual’s life expectancy.

Accumyn projected long-term growth for future medical costs and wages from federal government agencies.   Accumyn also established the individual’s pre-injury earning capacity and applicable income tax rates and deductions, factoring in the employer’s cost for applicable fringe benefits. Finally, Accumyn calculated the amount necessary to pay future income taxes on the interest earned from the anticipated damage award.

Market Analysis of Financial and Economic Damages to Shopping Center Developer

Accumyn prepared a detailed analysis of the deteriorating capital markets during the 2007 financial and credit meltdown and the impending sub-prime mortgage crisis to derive a but-for calculation that would represent what could have been done by a shopping center developer had they been informed in March 2007 of their anchor tenant’s intent not to lease. This analysis included a comparison of the value of the center based on spring 2007 market conditions and conditions at the time of trial in late 2009.

The shopping center developer initiated a project in The Woodlands, Texas, to build a Class-A center under the assumption that the anchor tenant, a high-end organic grocery store, would be occupying the most visible space to attract customer traffic and enhance its appeal to other tenants and institutional investors. However, the grocery tenant allegedly decided to terminate its lease several months before disclosing to the developer. The alleged misrepresentation coincided with the 2007 financial and credit meltdown and the impending sub-prime mortgage crisis. Due to the anchor tenant’s delayed notification, the developer experienced difficulty in filling the remaining space and subsequently had to develop the center in a market characterized by scarcity of credit funds, higher required rate of returns from equity investors, and a poor overall prospect of the U.S. economy; this resulted in higher capitalization rates and a lower market value of the center. The Accumyn team assisted the developer by preparing analysis of various budgets based on different development scenarios, including net rentable square footage, lease rates, capitalization rates, and discounts rates in various timeframes.

luigi-calabrese

LUIGI CALABRESE

DIRECTOR

lcalabrese@accumyn.com