Upon the termination of a commercial agency relationship the agent can be due compensation. The amount of compensation payable is calculated as an amount equivalent to the value of the agency business at the time that the agency relationship was terminated. The value of the agency business is based on what a third party might reasonably be expected to pay for it at the point of termination.

We use our extensive business valuations expertise to assess the value of the agency business at the time that the agency relationship was terminated. As with any business valuation there can be a number of factors to consider in quantifying the compensation due on termination of a commercial agency relationship. In an agency business, the situation is often complicated by the existence of multiple agencies and the sharing of common resources including both overheads and the individual(s) acting as the agents. We take a pragmatic approach to apportioning costs in such situations in order to be able to prepare a robust quantification of compensation but in a cost effective way.

We have quantified the compensation due following termination of commercial agency relationships on behalf of both agents and principals.

Forensic cases

Quantification of compensation on termination of agency – academic study guides

Acting on behalf of the claimant to quantify the compensation due on termination of a commercial agency relationship relating to the sale of academic study guides. The calculations were complicated by the fact that the market for the products being sold had recently undergone a significant change due to the introduction of new examination structures in private schools.

Quantification of compensation on termination of agency – interior decoration

Acting on behalf of the defendant to review a claim for compensation due on termination of a commercial agency made by an agent dealing in the interior decoration marketplace. We considered the assumptions made in respect of the claim, in particular in relation to the apportionment of costs between different agency agreements, to help the defendant understand the reasonable quantification of compensation due.

Forensic accounting testimonials

Forensic accounting team

Typically instructed to provide independent and objective expert witness and advisory services in relation to matters involving owner-managed SME businesses.

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