Valuations in Litigation

 

There are many reasons the value of a business or ownership interest in a business is litigated. These could include:

  • Shareholder oppression claim

  • Marital dissolution

  • Redemption from a deceased shareholder’s estate

  • IRS dispute

  • Destruction of business claim

  • Fraudulent conveyance allegation

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In each case, the facts, circumstances, and allegations create new challenges.  The business valuation (or appraisal) firm selected should most importantly possess the skills and experience to critically assess the nuances of the case.  This takes an understanding of business valuation principles and standards, along with clear direction on what the law requires.  This means that you need:

  • A business valuation firm with the highest level of accreditation

  • An expert within the firm who can deliver cogent, solid, persuasive testimony

  • … with the years of litigation experience necessary to work hand in hand with the attorney or law firm, helping them understand how the valuing of the business ties in with the legal arguments they will raise in the case.


In a litigated matter over the value of a closely held business or ownership interest is not about simply hiring a person who holds themselves out as a business valuation professional.  The attorney and their client need the right business valuation expert who can take their opinion of value all the way through a trial, if necessary.

In a recent case, we were engaged by a very successful, family owned, food manufacturer to value the 8% ownership interest.  This 8% shareholder was a family member but was not active in the business.  This valuation was necessary because the interest holder had made claims of shareholder oppression, and the valuation was pursuant to a statutory buy-out under Oregon law.  The judge determined that the expert opinion and analysis of Jay Sickler was the correct subject to a couple of minor modifications.  It was a case where we knew what information was important to support a credible valuation analysis and conclusion.  Critical information to determining the value of the 8% shareholder was not asked for and incorporated into the other expert’s opinion.

If you need a valuation to be presented in front of a trier-of-fact, consider Cogence Group’s valuation and testimony experience to resolve your matter.

 
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