BP Gulf Oil Spill Financial Loss Claims May Require Certified Business Appraisal and Valuation for Full Compensation | eyescoops.ca

BP Gulf Oil Spill Financial Loss Claims May Require Certified Business Appraisal and Valuation for Full Compensation | eyescoops.ca

The BP Deepwater Horizon Oil Spill has affected countless small and large businesses operating in the coastal Gulf State regions. If you own a business that has suffered a loss due to the rupture and release of oil in the Gulf of Mexico, then you may have a claim to present to British Petroleum as well as other insurance and emergency loan organizations. The greater your company’s financial loss, the more important it is to provide legal, court-approved documentation outlining the value of your business.

Examples of the types of businesses that have suffered losses in value “directly” from the BP oil spill include: commercial fishermen, oyster and seafood processing businesses, recreational businesses along the coast that depend on the tourist trade, suppliers of pipes and fittings for BP’s drilling operation, businesses whose vessels ferried personnel and supplies to and from the rig, etc.

Importantly, a business may have suffered a loss in revenue and earnings “indirectly” as a result of the BP oil spill. This is still a compensable loss! These include suppliers of goods and services to the fishing industry, to BP for its former drilling and extraction operations, nearby restaurants, resorts, cocktail lounges that have seen their patronage disappear, liquor stores, hotels and hotels whose guests and prospects for paying guests in the future have diminished, property/landowners, recreational tour operators — what type of business has not suffered a loss?

Operating businesses are typically appraised or valued based on their past, present and future earnings. A knowledgeable and prospective buyer of a business will estimate (as best he or she can) what earnings will be generated in the future. The buyer “buys” the business based on both the value of the hard assets (accounts receivable, equipment, inventory) “plus” the goodwill it has generated.

Goodwill is generally defined as the salable value of a business arising as a result of name, reputation, customer loyalty, location, products, and similar factors.

A business that has found that its capacity for generating revenues and earnings has been lost or severely damaged may have suffered a loss of its salable goodwill. This loss is in addition to its loss of hard assets and physical property. As an example only, a business that had generated $250,000 in annual earnings before the oil spill and finds that its earnings will be reduced to $50,000 in the future has lost $200,000 a year, each year into the future. The $200,000 loss may translate into a loss of three, four or five times the annual loss, or $600,000 to $1,000,000, as an example.

In order to substantiate a claim for loss of value, it is recommended that you engage the services of a well-qualified business appraiser. The valuation process that the appraiser will follow will be to interview the business owner, learn about the nature and history of the business, and why it has been a viable and profitable operation in the past. Also, what has happened as a result of the BP oil spill that has damaged the business. The appraiser will then prepare what is known as “before” and “after” calculations.

The “before” analysis determines the fair market value of the business “before” the damages occurred. “But for” the oil spill, this is what the business was worth and would have been worth. The “after” analysis determines what the business is worth “after” the disaster has diminished its value.

The difference in value between before the spill and after the spill is the loss in goodwill value that the business has sustained, and may be claimed as a loss to BP and the independent arbitrator agreed upon by the government.

If you have suffered a loss as a result of the BP Gulf Oil Spill and contamination, Business Enterprise Appraisal Company, Inc. (BEACo), established in 1972, may be of assistance. The firm’s principal, Larry Grant, ASA, is an Accredited Senior Member of the American Society of Appraisers in the specialty of Business Valuations. Mr. Grant and his team are recognized experts in appraising businesses, goodwill, and the damages they have sustained as a result of factors outside their control.

You may access their website at: http://www.beaco.com – Email the office at: clientcontact@beaco.com – or Call directly at: 818-591-9282

Business Enterprise Appraisal Company, Inc. (BEACo) is recognized as one of the leading full service business valuation and litigation support firms in Southern California. The firm’s principal, Larry Grant, ASA, is an Accredited Senior Member of the American Society of Appraisers in the specialty of Business Valuations. Mr. Grant and his team are recognized experts in appraising businesses, goodwill, and the damages they have sustained as a result of factors outside their control. Its qualified staff brings to any situation more than 45 years of combined experience in preparing comprehensive appraisals for businesses, professional practices, individuals, as well as litigation support and expert witness testimony.