A forensic accountant or a business valuator is often presented with management’s forecast. What degree of reliability can that person place on the forecast for either a valuation of a business or for a determination of lost profit for business damages? That depends.

Take for example the case of Cargotec Corporation v. Logan Industries, Fourteenth Court of Appeals No. 14-17-00213-CV. Cargotec and Logan had entered into a letter of intent (LOI) whereby Cargotec would acquire Logan’s assets. The transaction was not consummated after a lengthy due diligence period and Logan accused Cargotec of stealing customers and trade secrets and was awarded $12.7 million of damages. On appeal, challenges were made to the testimony of Logan’s damages expert who was a CPA and who was also accredited in business valuation.

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