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How to Select a Business Valuation Expert: A Guide for Attorneys

How to Select a Business Valuation Expert: A Guide for Attorneys

Business Valuation  |  Forensics & Litigation Support

Figuring out how to select a business valuation expert can be tough. A quick Google search yields hundreds of so-called valuation experts, but how do you whittle down the list? The good news is there are specific qualifications and certifications attorneys can use when evaluating potential business valuation experts.


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Communication Skills

Good communication skills are vital for a valuation expert. A business valuation expert must be able to explain complicated concepts and have a judge understand those concepts. One way to evaluate whether a valuation expert is a skilled communicator is by looking for a history of articles and speaking engagements. If you see an expert with a history of speaking engagements, there’s a better chance they know how to communicate ideas to an audience. The same goes for written communication. If the valuation expert publishes blog posts, guides, reports, eBooks, etc. and is able to express ideas in a clear, concise way, then that’s a good indication their writing skills are up to par.

Experience

It’s important to look at a valuation expert’s curriculum vitae (CV). A valuation expert’s CV should list their professional experience, certifications and case history. Use a CV as your basis to help you determine how experienced a valuation expert is and whether they have the chops to perform the work. The best candidates will have experience as an expert witness and feel comfortable testifying.

It’s worth noting that, typically, it’s not necessary for a valuation expert to have specific industry knowledge when valuing a business. A good expert can obtain industry specific knowledge as they go through the valuation process.

Certifications

Certifications are important when evaluating valuation experts. You should look for a business valuation expert to possess one or more of the following certifications:

  • Certified Valuation Analysts (CVA) | National Association of Certified Valuators and Analysts
  • Accredited in Business Valuation (ABV) | American Institute of CPAs
  • Accredited Senior Appraiser (ASA) | American Society of Appraisers
  • Certified Business Appraiser (CBA) | Institute of Business Appraisers

Questions to Ask a Business Valuation Expert

If you’re on the fence about hiring a business valuation expert, here’s a few questions to learn more about their valuation style, professional experience, fees, etc. You can download a PDF of these questions here.

  • How many valuations have you performed over the last year?
  • How many of your previous engagements have been for divorce purposes?
  • What valuation credentials do you hold?
  • What is your prior testifying experience?
  • What methods do you typically use in a case like this one?
  • How many times have you been engaged by opposing counsel?
  • Do you have any known conflicts?
  • What are your engagement fees and costs?
  • What sets you apart from other valuation practitioners?

Costs

Hiring a business valuation expert comes with a price tag. However, like most things in life, you get what you pay for. The cost of hiring a valuation expert can vary from case to case. You should expect to pay a retainer for the work and be charged based on the expert’s hourly rates.

If you want more information on the costs associated with hiring a valuation expert, we wrote an article to help explain why costs can vary in a business valuation.

Advice to Provide to Your Client When Hiring a Business Valuation Expert

Another important part of selecting a business valuation expert is communicating the expert’s role to your client. When working with a valuation expert, ensure that your client is aware that the expert’s valuation and the outcome of the final report are unknown. The valuation expert you choose should have a reputation of being unbiased and fair. After all, if your expert has a history of giving extreme positions in favor of the client, your opposing counsel will have an easy opportunity to poke holes their testimony.

It’s important to remind your client that engaging a business valuation expert can communicate an important message to the opposing party that your client is ready for trial should other negotiations fail. This can be especially important in divorce litigation when clients are often willing to avoid long legal battles.

Your Role as an Attorney

When you’ve selected a business valuation expert, you become the navigator and quarterback for the business valuation team. As an attorney, you must make the assignment clear to your valuation expert and be able to answer questions like:

  • What is being appraised?
  • What is the schedule?
  • What is the standard of value?
  • What is the valuation date?

Help the valuation expert by facilitating discovery and keeping the expert informed of the schedule. Together, you can work with the valuation expert to obtain a positive outcome for your client. Your expert can provide assistance by developing questions for depositions, cross-examination or an opposing expert and their direct testimony.

Need Help?

Our team of business valuation experts are here to help. We provide business valuations to clients in Maryland, Virginia and Washington DC. You can contact us online or by calling 800.899.4623.

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Published on November 12, 2019