Independent business valuers may face this question from clients or, if they’re testifying, from the opposing side. Those who have been in the profession for a long time are probably equipped to answer this question without having to admit that their conclusions of value are undependable, but, as one expert told us, “it takes discipline.”
Jim Hitchner, one of the leading business valuers in the U.S., has created a set of “strong” dialogues when asked about the reliability of a valuation. The entire set are available in last week’s issue of Hardball With Hitchner. Jim agrees that it’s fine to admit that performing a business valuation is more difficult during COVID-19 but with the caveat that this isn’t the first cultural or economic crisis we’ve been through. So he summarises that, while completing a valuation report may be more difficult, it’s not less reliable. To quote Hitchner, responding to a hypothetical question from an opposing lawyer:
Question: How can you say the valuation was harder to do under COVID-19 but is still reliable? That doesn’t make sense, does it?
Answer: You asked me a two-part question. I will answer your first question. Some valuations are easier to do than others. That has always been the case. This COVID-19 period is not the first time period where many valuations were harder. A qualified and experienced analyst knows this and makes adjustments accordingly. COVID-19 valuations are reliable.
As to your second question, given my answer to your first question, it makes perfect sense.
Contact Janet Kern for further information about Hardball With Hitchner.