Business valuation credibility in a dispute

When you face a dispute, whether partner disagreement or legal challenge, the parties are usually wide apart in their expectations of business value. To bridge the gap, keep in mind that a reasonable estimate of the future business outcome is usually achievable. If you expect to be challenged on your business valuation, be sure you or your business appraiser are as objective as possible and the key assumptions underlying your valuation are well supported by facts.

Business valuation controversy – when results are wide apart

Why so many disagreements? When trust between parties is lacking, they expect the opposite side to pressure their appraiser into producing the results they want. After all, they are paying for the business valuation. So suspicions abound: he who pays the piper calls the tune.

When in doubt, go to the key assumptions made in the business appraisal. Take a step back and ask the question, “Do you believe these assumptions?” If you don’t buy the assumptions, explore the alternatives that sound more realistic. See the difference it makes to the business valuation results.

Business valuation in divorce and other disputes

In a legal challenge, you are very likely to run across adversarial positions. The trust between the parties has been broken, and each side is pushing for its own point of view. Expect this to show up in the valuation results. Needless to say, this is immediately challenged by the opposing party.

Objective business valuations are best

Even in the most difficult situations, being objective in your business valuation is the best policy. The goal is to come up with the correct answer rather than push the envelope expecting to make a compromise down the road.

Hidden agendas like this only breed more distrust and endless arguments. Work to get it right the first time.

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