August 7, 2017 | Valuations
When a business is going through litigation, the job of a valuation expert is to provide an independent opinion as to the value of the business interest involved. The other party will also offer their idea of the business’ value, and often the two numbers are very far apart. The values usually seem to be tilted toward the side being represented by the valuation expert.
Judges have taken note of this, so attorneys and valuation experts should be alert for unintended biases in their valuation conclusions.
Judges are becoming more cognizant of wide variances in values and they are becoming less patient with the experts. Daubert is an effective enforcement tool for judges and they are becoming more apt to use it.
In order for an attorney and valuation expert to avoid possible excluded testimony, they need to work as a team. The attorney can serve as another point of view while working with the valuation expert. It is difficult sometimes for even the best valuation analysts to put together reports that properly support the assumptions and premises that are necessary for the report to succeed in court. Therefore, attorneys should review the reports themselves and maybe even have someone else also look them over. It is important from the report itself shows how the valuation expert arrived at his or her valuation conclusion and why that value is supportable and reasonable. This is especially important in a case where the opposing expert might have a widely divergent view of the value from your expert’s view.
The valuation expert can also assist the attorney in putting together an analysis of the differences between the valuation conclusions in the two reports and the reasons for the differences, including the support for each difference. This can be used as a helpful tool during testimony.
Finally, it is important that the attorney and the valuation expert insure to the best of their abilities that the report meets the Daubert requirements. Again this is especially important in today’s climate where judges have to deal with divergent values that they believe are both biased in favor of the appropriate client.
There is no reason why the attorney and the valuation expert cannot be a team without crossing the line into advocacy for the client. For more information, contact Filler & Associates.