Alphonso co-founder files lawsuit against valuation firm Kroll

Lampros Kalampoukas, a co-founder of television data measurement startup Alphonso, has filed a lawsuit against risk and financial advisory services firm Kroll for allegedly deliberately undervaluing the company by nearly $100 million, according to legal documents filed on July 15, 2025, in Manhattan Supreme Court.

The complaint accuses Kroll of professional misconduct for manipulating the valuation process to suppress Alphonso's value and allow LG Electronics to acquire shares at below-market prices. According to the documents, Kroll deviated from standard valuation practices by using "excess cash" rather than total cash when calculating equity value, resulting in a nearly $100 million reduction in the company's worth.

Alphonso, which was rebranded as LG Ads after LG Electronics acquired a controlling stake in December 2020, specializes in advertising technology for smart TVs. The company provides a platform for advertisers to reach consumers on connected TV operating systems and builds technology to measure advertising effectiveness.

Background of the shareholder dispute

The relationship between LG Electronics and Alphonso's founding leadership deteriorated almost immediately after the acquisition. In 2023, less than two years after LG's investment, the co-founders of Alphonso, including Kalampoukas, Raghu Kodige, and Ashish Chordia, sued LG Electronics twice for breach of contract and for orchestrating a boardroom coup to oust founder-aligned directors.

The founders won both cases in Delaware courts, which ruled that LG Electronics had booted Alphonso's founders from the LG Ads board in bad faith. The courts restored the founders to the board, upheld their IPO rights, and imposed restrictions on LG Electronics to prevent it from diluting minority shareholders or interfering with the IPO process.

According to the successful 2023 lawsuit, LG Ads generated $270 million in revenue by 2022 at a more than $1 billion valuation, which was nearly 10 times its valuation at closing. The stockholders agreement requires LG Electronics to pay a price per share equal to Alphonso's fair market value at the time of each tender offer.

Kroll's disputed valuation methodology

Under the terms of the stockholders agreement, the price for each scheduled tender offer is determined through a specific process. Company directors appointed by both LG and certain key holders are each required to retain a valuation firm to determine the fair market value per share of Alphonso's stock. If the valuations are more than 10% apart, a third valuation firm is selected to conduct its own valuation.

For the first tender offer, which closed in November 2024, Kroll calculated fair market value by first determining enterprise value and then subtracting net debt, which is consistent with well-established standards. According to the lawsuit, all three valuation firms, including Kroll, used the equation: Equity Value = Enterprise Value + Cash Equivalents.

However, for the second tender offer valuation issued on June 18, 2025, Kroll allegedly changed its methodology without explanation. Instead of using total cash, Kroll applied a narrower definition of cash contributions that excluded excess cash and other cash reserves. The complaint states that Kroll's formula became: Equity Value = Enterprise Value + Excess Cash.

According to the lawsuit, Kroll calculated excess cash by subtracting current liabilities from total cash, making the implicit assumption that Alphonso had a working capital deficit of nearly $100 million as of March 31, 2025. The complaint argues this assumption was unreasonable given that Alphonso is among the most well-capitalized of its peers in terms of adequate working capital and lack of debt.

Professional standards violations alleged

The lawsuit claims Kroll's valuation report violated the Statements on Standards for Valuation Services No. 1 published by the American Institute of Certified Public Accountants. The AICPA standards require that detailed reports include valuation approaches and methods considered, valuation approaches and methods used, and valuation adjustments.

Kroll's report allegedly relegated its definition of "excess cash" to a single clause in a single footnote in its 82-page report, without any description of how that definition was chosen. The complaint states that Kroll made the false statement that its analysis "added the balance of cash and equivalents" in its conclusion, without referencing excess cash.

The lawsuit alleges that when asked for an explanation of its methodology shortly after its report was issued, Kroll refused to justify its use of the "excess cash" methodology or explain why it changed methodologies between its two valuations of Alphonso, which were conducted only nine months apart.

Impact on market valuation and IPO plans

The changed methodology reduced Alphonso's equity value by almost $100 million, according to the suit, "dramatically reducing the value of its shares for its shareholders." The complaint states that if Kroll had used total cash rather than "excess cash," as each of the other valuation firms had done in both tender offers, its ultimate value would have been closer to FTI's valuation, resulting in a final tender offer price over $10 per share higher.

Despite the valuation disputes, LG Ads is still actively pursuing an IPO. According to previous reports, the original timeline to go public by the end of Q2 2025 was delayed due to some resistance from LG Electronics. However, LG Ads has now hired RBC Capital Markets to handle the IPO process and expects to file its S-1 soon.

The lawsuit represents the latest chapter in the ongoing legal saga between Alphonso's founders and LG Electronics. According to Ashish Chordia, who was the architect of the founder-led lawsuits against LG Electronics in 2023, "This is not going to get fixed overnight, and a court case like this can go on for months if not years. But, regardless, it's important to make a statement, because what Kroll did was absolutely flawed."

Legal demands and relief sought

In the Manhattan Supreme Court filing, Kalampoukas is seeking several forms of relief. The complaint requests damages in amounts to be determined at trial, together with pre-judgment interest at the maximum rate allowable by law. The plaintiff is also seeking reasonable costs and expenses incurred in the action, including counsel fees where applicable.

The lawsuit seeks declaratory relief stating that Kroll's June 18, 2025 valuation report does not reflect the Tender Fair Market Value of Alphonso and violates generally accepted standards of practice, including the AICPA standards. The plaintiff argues that such declarations will clarify the legal relations between the parties.

Significance for the advertising technology industry

This lawsuit highlights the critical importance of accurate valuations in high-stakes corporate transactions, particularly in the rapidly growing connected TV advertising sector. The connected TV industry has experienced tremendous growth, with LG Ad Solutions expanding its global reach through strategic partnerships and innovative advertising formats like screensaver ads that boost brand awareness.

The case underscores the tensions that can arise when high-growth technology companies are acquired by larger corporations with different strategic objectives. For the advertising technology community, this dispute serves as a reminder of the importance of clear valuation standards and the potential conflicts that can emerge when third-party valuation firms have business relationships with multiple parties to a transaction.

The ongoing legal battles have not prevented LG Ads from continuing to expand its business operations. Recent developments include partnerships with companies like Viant to advance addressability in CTV and joining Innovid's Harmony initiative to optimize CTV advertising.

As the connected TV advertising market continues to mature, the resolution of these valuation disputes could set important precedents for how similar transactions are structured and valued in the future.

Timeline of Key Events

• December 2020: LG Electronics acquires controlling stake in Alphonso for approximately $80 million
• March 2021: Alphonso rebranded as LG Ads
• July 2021: Raghu Kodige appointed as CEO of LG Ads
• December 2022: LG Electronics ousts Alphonso founders from board in alleged coup
• April 2023: Alphonso founders file first lawsuit against LG Electronics in Delaware
• January 2024: Delaware Chancery Court rules in favor of Alphonso founders
• March 2025: Delaware Supreme Court upholds original ruling
• November 2024: First tender offer closes based on Kroll's initial valuation
• June 18, 2025: Kroll issues second valuation report using disputed methodology
• July 15, 2025: Kalampoukas files lawsuit against Kroll in Manhattan Supreme Court

The Five Ws Summary

Who: Lampros Kalampoukas, co-founder of Alphonso, is suing Kroll, a risk and financial advisory services firm. The dispute involves LG Electronics, which acquired a controlling stake in Alphonso in 2020.

What: The lawsuit alleges that Kroll deliberately undervalued Alphonso by nearly $100 million by deviating from standard valuation practices, specifically by using "excess cash" rather than total cash in its equity calculations.

When: The complaint was filed on July 15, 2025, in Manhattan Supreme Court, addressing Kroll's June 18, 2025 valuation report.

Where: The lawsuit was filed in New York County Supreme Court in Manhattan. The underlying disputes involve Alphonso/LG Ads, which operates as LG Electronics' ad tech and TV data analytics division.

Why: The lawsuit claims Kroll changed its valuation methodology to align more closely with LG Electronics' interests and maintain favorable business relationships, allegedly reducing the value available to minority shareholders in scheduled tender offers required under the stockholders agreement.

PPC Land explains

Valuation: The process of determining the economic worth of a company or asset. In this case, three separate firms were tasked with determining Alphonso's fair market value for tender offer purposes. The dispute centers on whether Kroll applied appropriate methodology when calculating the company's equity value, with the plaintiff alleging that improper techniques artificially reduced the valuation by nearly $100 million.

LG Electronics: The South Korean multinational electronics company that acquired a controlling stake in Alphonso in December 2020 for approximately $80 million. LG Electronics sought to integrate Alphonso's television data and measurement capabilities into its broader connected TV advertising strategy, but the relationship with minority shareholders deteriorated due to disagreements over valuation and IPO timing.

Alphonso: The television data measurement startup founded in 2012 that specializes in advertising technology for smart TVs. After LG's acquisition, the company was rebranded as LG Ads and became LG Electronics' ad tech and TV data analytics division. The company provides platforms for advertisers to reach consumers on connected TV operating systems and builds technology to measure advertising effectiveness.

Tender Offer: A corporate finance mechanism where shareholders are given the opportunity to sell their shares at a specified price within a certain timeframe. Under the stockholders agreement, LG Electronics was required to make scheduled tender offers to minority shareholders at fair market value, with offers scheduled for March 31, 2024, 2025, and 2026.

Stockholders Agreement: The legal contract executed between LG Electronics, Alphonso, and key holders in December 2020 that established the terms of LG's investment and minority shareholder protections. This agreement required LG to make scheduled tender offers at fair market value and promised that Alphonso would have the opportunity to go public within five years of the acquisition closing.

Equity Value: A financial metric representing the total value of a company's shares, calculated by taking enterprise value and adjusting for cash and debt positions. The core dispute involves whether Kroll properly calculated this figure by using total cash or a reduced "excess cash" amount, with the methodology choice significantly impacting the final per-share price offered to minority shareholders.

Excess Cash: The controversial valuation adjustment applied by Kroll in its second assessment, calculated by subtracting current liabilities from total cash holdings. This approach differed from standard practices and Kroll's own previous methodology, leading to accusations that the firm deliberately reduced Alphonso's apparent value to benefit LG Electronics in the shareholder dispute.

Kroll: The risk and financial advisory services firm retained as the independent third-party valuator when the initial two valuations were more than 10% apart. The lawsuit alleges that Kroll prioritized maintaining business relationships with LG Electronics over providing objective valuation services, resulting in professional misconduct and violations of industry standards.

IPO: Initial Public Offering, the process by which a private company offers shares to the public for the first time. The stockholders agreement promised minority shareholders that Alphonso would have the opportunity to go public within five years, but LG Electronics allegedly attempted to prevent this after the company's value increased substantially beyond initial projections.

Manhattan Supreme Court: The New York state trial court where Kalampoukas filed his lawsuit against Kroll on July 15, 2025. The court has jurisdiction over the matter because the parties agreed that New York courts would have exclusive jurisdiction over disputes arising from the engagement agreement, and because Kroll is headquartered in New York County.