Page 49 - Calculating Lost Profits

Figure 7.3. Executive Compensation Expense Compared to Total Food and Beverage Revenue

Courts have recognized that the specific analysis necessary in the evaluation of incremental expenses
will depend on the facts and circumstances of the business and dispute. fn 4 Issues that are routinely en-
countered when performing an evaluation of specific line items include the following:

 Incomplete or missing monthly data (making a monthly trend analysis not possible).

 A business may have limited operational history.

 Limitations on data for comparable entities, resulting in the questioning of those entities' compa-
rability and relevance.

In these types of situations, other tools may be of use. For example, in some situations the lost revenue
may be from an existing business that had an impairment as a result of the disputed event (such that
there may be a history of sales and costs at a level similar to the but-for world), whereas in other situa-
tions the lost revenue may be from a new business or new line of business (so the but-for world would
not be similar to the historical period). In these situations, historical cost data will be less available or
potentially less relevant (for example, if the comparable entity costs are different, such as a Franchisee
store in a more expensive location than Franchisee's other stores or in a location that has a higher labor
cost, or possibly the ability to charge higher prices, such as in an airport). In addition, the historical peri-

fn 4 See, for example, Aon Consulting v. Midlands Fin. Benefits, 275 Neb. 642 (Neb. 2008) (Finding salary and benefits costs need not
be deducted as part of the lost profits calculation in which plaintiff had personnel available to service business obtained in breach of a
noncompete agreement).

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