Michael B. Lehner, CPA/ABV, CFE, ASA
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Make business valuation experts a forethought, not an afterthought

Important to hire business valuation experts early in the litigation process

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Too often, business valuation experts are hired months after a case is filed or just before it goes to trial. This limits the documents and procedures they can use to perform their analysis. However, you can save significant money, time and frustration by hiring an expert early in the litigation process and asking for relevant information during discovery.

A preferred list of candidates

Do you have a list of experts who are qualified to value a business? Attorneys who deal with corporate litigation or marital dissolution cases need to have a list of credentialed business valuation candidates on hand, so they can act decisively when the need arises.

Meet with your preferred expert at the start of each case. The initial consultation gives attorneys and clients an opportunity to understand the business valuation process and discuss a timeline. This meeting also helps experts understand the nature of the lawsuit and scope of the engagement.

In turn, hiring an expert early helps attorneys draft discovery requests and allows experts sufficient time to analyze relevant data. Plus, naming a preferred expert upfront prevents the opposing side from hiring him or her.

Relevant documents and procedures

Before experts can value a business interest, they need help gathering relevant information, such as:

  • Three to five years of financial statements,
  • Three to five years of income tax returns,
  • Marketing materials,
  • Employment contracts for key employees,
  • Lease agreements and other major contracts,
  • Fixed asset listings,
  • Shareholder agreements,
  • Organizational charts and job descriptions,
  • Information about related parties, and
  • Prior valuations and narratives describing past stock transactions (for example, shareholder buy-ins or buyouts or offers to purchase the business from third parties).

Proactive attorneys include these items in their written discovery requests, especially in adversarial situations. They also may request that their business valuation experts be granted access to the company’s facilities to conduct a site visit and perform a comprehensive management interview within a reasonable time period.

These are critical steps in the valuation process. To help facilitate these procedures and minimize potential disruptions, some attorneys provide a detailed questionnaire for management to complete prior to site visits.

Think outside the box

The list provided here is just a starting point. Other possibilities exist, including information that’s stored electronically or on social media. Comprehensive discovery ends with one final question: Is there anything else my expert should know that might be relevant to valuing this business? If you hire an expert early, you can brainstorm your discovery checklist together.


Michael Lehner

This publication is distributed with the understanding that the author, publisher and distributor are not rendering legal, accounting or other professional advice or opinions on specific facts or matters, and, accordingly, assume no liability whatsoever in connection with its use. In addition, any discounts are used for illustrative purposes and do not purport to be specific recommendations.