Hiring a business valuation expert to provide an opinion on the value of your business can ensure that you and your legal counsel are equipped with the needed intelligence to make informed decisions at every stage of a dispute.
But an opinion on a business’s value is just one of the ways a business valuation expert can help ease your path during litigation. When brought aboard early in a case, a business valuation professional can serve as a consulting expert who can provide an initial assessment of the range in which a business’s value might fall, as well as an estimate of the potential ranges of costs of business valuation expert fees should a case advance to a trial or arbitration.
These initial calculations can help you and your counsel better gauge the potential cost/benefit of litigation and can be a crucial factor in determining whether you should move ahead with a case or seek a settlement. The early work provides a significant strategic bonus as well: The consulting business valuation expert’s work typically falls under the attorney work product doctrine, which means the valuation work product does not need to be disclosed to opposing litigants or their counsel.
A More Efficient Litigation Process
Having business valuation experts involved in your case also can help improve the efficiency of the litigation process. In the early phases of litigation, business valuation experts can:
- assist with document requests.
- support development of interrogatories and review responses to interrogatories.
- help develop requests for production and review responses to requests for production.
- review correspondence and non-financial information.
- calculate a hypothetical range of values during an early case assessment.
In addition to valuation opinions and reports, business valuation experts can also:
- develop deposition or trial direct or cross examination questions.
- review business valuation reports of undisclosed, disclosed or opposing business valuation experts.
- provide consulting feedback to you and your counsel on your undisclosed or disclosed business valuation report reports.
- author rebuttal reports to business valuation reports by opposing experts.
- review business valuation rebuttal reports and develop responses.
- participate in mediation and arbitration hearings.
A Phased Approach Can Maximize Value
Involving the valuation expert early can be the first step in a phased approach to your business valuation. By adopting a phased approach, you and your counsel have the flexibility to start with a less intensive and more cost-effective analysis, with the option to escalate to a more detailed analysis if necessary. This flexibility is particularly useful for managing costs and for adapting to the evolving dynamics of a dispute.
The phased approach begins with the business appraiser conducting a “calculation of business value,” which is a preliminary calculation that, as we have noted, can significantly influence decisions or facilitate settlements early in a case.
When a case moves beyond preliminary settlement discussions and towards trial, the phased approach allows you to transition to a more comprehensive analysis, the “conclusion of business value.” In most jurisdictions, the conclusion of business value by a business valuation expert must be disclosed and may be accompanied by expert testimony.
The phased approach is just another example of the ways business valuation experts can add value and improve efficiency during the litigation process. To learn more about our phased approach to business valuations, visit our litigated business valuation practice page or contact us to schedule a call with one of our experts.