In most valuation disputes, each side hires its own valuation expert. Naturally, the two experts often disagree about the value of the assets in question. In court, the experts present their opinions, the attorneys argue the merits of each valuation, and the judge or other “finder of fact” decides the outcome, often leaving one side unhappy.
There is another way. In some circumstances, a neutral expert can represent both sides—an option that is becoming more popular in cases of divorce, shareholder disputes, and other business disagreements.
The Benefits of Neutrality
Valuations can be costly, time consuming, and stressful for both parties. Using a joint, neutral valuation professional can move a case along efficiently.
Save money. There’s no question that hiring one expert instead of two (or sometimes more) saves money for both sides. This is the most obvious and compelling reason for using a neutral appraiser, and is especially appealing to divorcing spouses who want to preserve assets.
Save time. Because the expert is working for both parties, there’s less time waiting for document production, fewer scheduling conflicts, and less back and forth between parties. This often expedites the case or settlement and allows the parties move ahead more quickly.
Ensure flexibility. Using a neutral valuation analyst is not a rigid arrangement. Clients can decide how to use the professional, whether it’s for a final opinion, a negotiable opinion, or a “yes/no” acceptance, where both parties agree to accept the opinion.
Agree to Ground Rules
Once the parties have agreed to hire a neutral valuation professional, they must set ground rules. For example:
Communication: All communication should be transparent. Everyone should be copied on correspondence so that all parties have the same information. One way to ensure this—and avoid any privileged conversation by one party or the other—is to require all communication in writing.
Disclosure: The neutral valuation analyst must have access to all documents, data, and other information related to the case, from tax filings to interview notes.
Engagement details: Engagement letters are especially important when a neutral analyst is involved because they clearly define the scope of work and the process involved. For example, do the parties want a formal valuation or will a calculation of value do? How will the appraiser gather information? What’s the proposed timeline?
Fees: Typically, both parties contribute to the cost of the valuation. Payment in advance eliminates the possibility that one party will be dissatisfied with the outcome and refuse to pay.
Finding a Neutral Analyst
Both parties should be involved in selecting the neutral valuation analyst. Look for credentialed candidates with exceptional communication skills. Both parties should be satisfied with the choice and confident that the selected professional can indeed remain neutral.
Hiring one valuation professional doesn’t guarantee a good outcome or even a pleasant experience in heated litigation, but a neutral analyst can save time and money in most circumstances.
Our team can help you with a neutral appraisal. Contact us to learn more.