December 02 , 2019

Business Value, “Divorce”, and an Expert Witness?

Many times my practice gets involved with business valuation and divorce in the Atlanta area. These disputes (i.e., marital "divorce" or business "divorce") can’t be negotiated during mediation, or other means, and must be presented to a judge in a court of law for final decision. I have served as an expert witness in Gwinnett, Fulton, Cherokee, Clayton, and Forsyth Counties of Metro Atlanta, GA offering business valuation consulting to divorcing clients.

During a dispute resolution process - whether it’s shareholders, partners, or spouses - when a business’ value is being questioned, an expert can be hired to provide an Opinion of Value on that business during the “divorce” process. This expert should have a business background and extensive experience in valuation processes so that he/she may clearly explain the methods and tools used in arriving at his/her Opinion of Value. An expert is needed because most people and many judges do not understand technical details of complex financial analysis and business operations. Any dispute resolution process like “divorce”when a business is involved starts with the Discovery of documents related to business value.   

Discovery Process

Disputes between shareholders of a company or a husband and wife negotiating a divorce that involve a business most likely will need a valuation expert to help resolve the conflict. In legal proceedings like these, discovery and production of financial documents about a business are critical to the process. Understanding and explaining the information in these documents requires a valuation expert in the field so disputes may be resolved. A valuation expert may also direct a lawyer as to what is necessary for the case in the discovery process to understand value. Once Discovery is complete, a valuation of the subject business can be performed and a sound report produced.

Report Review and Deposition

In my experience, depositions are used by attorneys to provide sworn evidence into the case. Business Valuation experts have experience analyzing businesses in various sectors across most industries. In this regard, they can be invaluable to attorneys that have to create technical business questions related to value. These questions are crucial to depositions, which can be a very important part of the legal process when a trial is anticipated but for other reasons as well. These experts also have the knowledge to evaluate and interpret deposition responses from the opposition. On that note, they may be requested to examine the work of another expert to look for strengths, weaknesses and bias in their reports. This includes providing and understanding of why the value of a company is different than what has been specified by another expert. The reasons can be multiple as I have found in many cases. When this valuation gap can’t be resolved, usually the court has to become involved and the interpreter of value serves as an Expert Witness.   

Expert Witness Testimony

A lot of times expert testimony by opposing valuation experts boils down to who is more believable and/or who represents the facts in an understandable fashion to their audience. As such, this testimony is usually provided by a valuation expert for gaining understanding and insight into the case that the judge, attorneys, or jury may need to understand for a fair settlement and/or final decree. The opinions of experts always carry more weight when details about the valuation and calculations need to be translated for the client, who may or may not be active in the business. Especially in family law cases, both parties may not be involved in the business or have a good understanding of business in general or how they might be affected by a lower or higher value perceived by the public or potential buyers.

Call me at 770-380-2406 if you need an expert witness or an Opinion of Value report that is easy to understand giving you a higher chance of success in your case.