Testimony and the Valuation Expert

We are increasingly being called to assist attorneys or the court in various litigation matters. Business valuations are frequently required in the following circumstances:

•   in disputed family law matters when one or both spouses are owners of a closely held        business,
•   in estate planning with the establishment of Family Limited Partnerships,
•   for estate tax returns when there is a closely held business owned (partially or wholly)      by the deceased,
•   in contested estate matters,
•   in lost profit or “but for” calculations,
•   in business interruption insurance claims,
•   in shareholder or partnership disputes and
•   in lender liability issues

The valuation expert must have a working knowledge of finance, accounting, economics, and marketing. Credentials are very important and often overlooked in selecting a valuation expert. CPA’s without the ABV designation (the AICPA grants the Accredited in Business Valuation) pose a Daubert risk at trial. There are two other professional valuation designations that are widely recognized as signifying a qualified business appraiser, the ASA (Accredited Senior Appraiser) designation (granted by the American Society of Appraisers and the CBA (Certified Business Appraiser (granted by the Institute of Business Appraisers. All of these designations require an experience requirement, extensive training, continuing education, peer review, and a rigorous examination.

Messrs. Eggers and Laversin possess all of these designations, CPA/ABV, ASA and CBA. At last count there were fewer than 100 valuation professionals in the United States that possess all of these credentials.

In addition to analytical skills, a testifying expert must exhibit oral and writing skills. A good expert witness is able to assist the judge and jury in understanding a complex issue and leading them to regard the valuation conclusion as well founded and sound. In our opinion, assisting the trier of fact is the primary responsibility of a respected testifying expert. We are not advocates for clients or positions. We are advocates of our opinion. A good expert witness is also able to withstand vigorous cross examination, which may involve a personal attack on the valuation expert, designed to impugn the integrity and credibility of the valuation expert, an attack on the methodologies and assumptions employed by the valuation professional. A good expert witness must be prepared to defend not only the employed methodologies and assumptions but also the conclusion.

A well written valuation report should lead the reader to the same conclusion as the preparer of the report. The same is true of oral testimony.

We live in a litigious society and many of the disputes involve closely held businesses. The financial issues are often contentious, complex and require valuation experts that are qualified and experienced litigation support professionals.