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Author: Lucy Reeve

Impairment of goodwill can reduce the actual value of a target

The Court of Appeal considered the quantum of a damages award made in relation to a claim for breach of warranties in a share purchase agreement. When determining the difference between the value of the shares had the warranties been true and their actual value given that the warranties were false, the Court may reduce the latter value to reflect the fact that a buyer who was aware of the breaches (and would have thought of the company's goodwill as less valuable) would not have been willing to pay as much for the shares.

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