Tuesday august 1 2023

This semester we offer Forensic Accounting ACCT 312 I will be posting more valuations adding to course content.

This is courtesy of hthe KFORD ©roup here in San Antoio

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Use a Rebuttal Expert to Break Valuation Deadlock
 

Financial experts use a variety of methods and inputs when valuing a business. So, it’s common for two experts working in good faith to reach different conclusions. In such situations, litigating parties must find a way to resolve their differences.  This is where rebuttal reports come in.

Identifying Sticking Points

Rebuttal reports can be useful in many cases, including divorces, shareholder disputes and mergers. They can help identify the sources of discrepancy between two expert opinions. This helps convert disagreements from complex questions about a business’s value to a list of manageable issues.

For instance, after reviewing both experts’ valuation reports, a rebuttal expert might conclude that their analyses are remarkably similar, except for some key differences. The sources of discrepancy might relate to, say, owners’ compensation, the expected long-term growth rate and the discount for lack of marketability. Once these specific issues are identified, the parties can argue the merits of their experts’ positions on these issues using objective market data.

In addition, rebuttal experts can quantify how specific issues, individually and combined, affect the valuators’ conclusions. This analysis can help the parties systematically whittle away differences.

Finding the Right Format

Rebuttal reports come in various formats. What’s appropriate depends on the time and resources available, as well as whether the parties are using a neutral third expert or the original valuators to generate the rebuttal report.

Written reports may vary in length. But they generally include a description of the rebuttal expert’s procedures and a list of findings and conclusions. Rebuttal reports should disclose all errors and omissions, not just those that support a client’s financial interests.

Some experts and attorneys prefer oral rebuttals. The underlying logic is that less formal discussions generate no tangible report for the opposition to review before court. Accordingly, oral reports can help preserve the element of surprise and minimize client costs.

But there’s a key downside to using oral rebuttals: Attorneys must understand technical financial and accounting issues well enough to design questions for deposition and trial. Incomplete testimony often misses key points and frustrates everyone involved. An oral rebuttal also leaves the judge or jury without a written record to review during deliberations.

Bridging the Gap

Rebuttal reports are designed to facilitate settlement by pinpointing key differences between divergent expert opinions and putting technical valuation issues in more user-friendly language. This can help the parties find common ground, even in the most contentious cases.