"Estimating Damages Due to the Loss of An Established Service Clientele:
A Market Value Approach for Cases of Self-Employment"
Journal of Forensic Economics, Vol. 12, No. 2, Spring/Summer 1999BY: ROBERT C. POSATKO
Shippensburg University
STEPHEN A. MATHIS
National Association of Forensic Economics (NAFE)ABSTRACT:
This paper presents an estimation methodology developed for appraising the damages incurred from the loss of an established service clientele, in a specific location. To illustrate the approach, the special case of a self-employed accountant whose practice was harmed by the Three Mile Island nuclear event, was selected for analysis. Other possible causes of such loss
in clientele to a business practitioner would include slander or other wrongful harm to the local reputation of the practitioner.The appraisal involved determining the loss in value of the subject business, and was accomplished by estimating its market value at the point of business interruption, using sales and earnings data that existed only for the period prior to the event. The approach to this valuation is rather unique in that the computed market value of the damaged firm has the opportunity cost of a prospective buyer of the practice factored into its calculation.
Contact: ROBERT C. POSATKO
Email: Mailto:rcposa@ship.edu
Postal: Shippensburg University
John L. Grove College of Business
1871 Old Main Dr.
Shippensburg, PA 17257 USA
Phone: (717) 532-1138
Fax: (717) 530-4015
Co-Auth: STEPHEN A. MATHIS
Email: Mailto:nafe@cctr.umkc.edu
Postal: National Association of Forensic Economics (NAFE)
P. O. Box 30067
Kansas City, MO 64112-0067 USA