Did T&Z Industries Cheat a Bought Company?
Everything had fallen apart for Ashley and Stan.
About a year ago, they had sold their company to T&Z Industries, expecting its sale to yield a goodly amount of money. They had sold on the condition that they would continue to receive a proportion of the income from existing contracts until they ended and were to be renewed. Essentially, Ashley and Stan would receive all of the accounts receivable due as of the sale date.
It had seemed that they would get significant payments for the next few years. Their company provided essential software for mini computers. Only a year ago, computers were cutting edge technology, used by everyone. Ashley and Stan had been looking for a way out and found a ready buyer in T&Z Industries, who agreed to pay them a portion of the existing contracts until they were renewed.
T&Z Industries, however; looking to maximize its profits, had started renegotiating the old, existing contracts in order to exclude payments to Ashley and Stan. Fed up, Ashley and Stan tried negotiating directly with T&Z Industries only to be rejected.
Their attorneys called us to value the damages. We used statistical and accounting techniques to estimate the monetary difference had the contracts not been violated. Our research came up with roughly $4 million in lost profits.
With that number, Ashley and Stan went to court. The judge ruled in their favor and awarded an additional $7 million in punitive damages.