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How Does an Expert Witness Help with Business Valuation?

Setting up procedures that are used to determine and estimate the financial value of the interest of a business owned by a person is business valuation. It is used for the market and what may be used as a starting point in pricing for the sale of a company.

An expert witness that has a business background and extensive experience in valuation processes may explain the methods and tools used to the average person that does not understand technical details of business practices. This may also provide a foundation for becoming aware how much a business is worth, the value that may be applied in abstract and concrete situations and in certain cases how the owner may use this information to increase the perceived value of his company.

If there is a dispute between stakeholders or shareholders of a company, a business lawyer may hire a valuation expert to resolve the matter in which they are in conflict. The independent opinion of someone that has practice and knowledge about valuation may explain how the value of the company may determine certain transactions, the increase or decrease of stock prices and the how
this may be used to attract new clients to purchase stock in the company. If the valuation is at a lower amount than these shareholders feel is justified, certain actions taken by the company or owner may be necessary to increase the value.

Discovery and Assistance

When there is a legal proceeding that may take place, document discovery and production is important. These business files are crucial for several factors in cases where a dispute may exist and fraud was committed by someone. Finding, understanding, explaining and grasping the information in these documents may be assisted through a valuation expert so that crimes may be discovered and disputes may be resolved. If certain papers have not been requested, these experts may direct a lawyer to what is necessary for the case in the discovery processes. They may also in detail translate transaction processes to the layperson that may not comprehend how the data correlates to business practices.

Deposition and Opposing Expert Review

When a valuation expert has been retained, he or she has the experience in analyzing businesses in various sectors across most industries available. Because of this, they are invaluable to lawyers when creating technical business questions needed in depositions. This also means they have the knowledge to interpret and analyze deposition responses. This could also be accomplished by a consultant when the expert witness has not qualified for further use in the case. Depositions are used to provide sworn evidence into the case, and an expert witness usually has some knowledge about the items or facts.

When valuation experts have been retained because there are opposing views, they may be requested to examine the expert work of someone else for identifying strengths and weaknesses. Technical questions may also be drafted for additional processes by these professionals. If there is a difference of opinion on certain transactions in a business, these valuation specialists may provide the method for understanding how the transaction applied to a certain situation and why the value of a company is different than what has been specified by another expert.

Business Facts and Development of Strategy

Market sources may be more open to a valuation expert so that they may research the issue at hand and collected all possible related data about the business transactions. This if usually possible when a lawyer has no contacts in the market to do so himself or herself. The best methods in approaching corporate issues may be developed or created by valuation professionals when applied to particular cases. Different views of the concern may provide discovery into the critical issues that may be plaguing the case. These technical details may not be understood by anyone by a third-part expert in the field.

Testimony of an Expert Witness

Testimony is usually provided by a valuation expert for understanding and insight into the case and technical details that the judge or jury may have no inclination about. The opinions of these professionals often carry more weight when documents about valuation and calculations of damages are needed to be translated for the client. These professionals may also explain how the individual is affected by a lower or higher value perceived by the public or in the business world. This may affect selling prices, stocks and interactions with shareholders. It is important to retain an expert witness to provide his or her testimony and provide a higher chance of success in the case.

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Disclaimer: While every effort has been made to ensure the accuracy of this publication, it is not intended to provide legal advice as individual situations will differ and should be discussed with an expert and/or lawyer.

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