So is it now safe? The problem isn’t that appraisers shouldn’t (or can’t) perform a calculation of value in these situations. It’s that, at the end of the day, “the only thing that anyone will remember is that you did not do a complete job,” says Gary Trugman, and “it will be the professional’s reputation that is hurt. While I understand that the small businesses are hard to cost-justify,” he adds, “our malpractice policy does not specify whether we are doing jobs for large businesses or small.”
“I completely concur,” says Ron Seigneur. “Under our professional standards, like them or not, a calculation is not a conclusion and, in my humble opinion, does not rise to the level of anything that one would want to wrap a professional opinion around. Saying that you can testify that the calculation ‘is correct within a reasonable certainty’ is like saying you are half pregnant,” he adds. “I do understand that some courts require all assets to be valued,” but just leave it as calculated numbers, leave out the “reasonable certainty” and in turn save your reputation.
“The point we all made in the BVResources teleconference (April 30th),” says Stacy Collins, “is that it is getting to be more and more of a high wire act to do the small cases in a litigation context, where we have to balance the fee issue with the scope of the work and maintain our professional reputation at the same time. Many valuation professionals are still coming to terms with what the new valuation standard (SSVS 1) means to their practice,” she says. “It’s important to have discussions like this to address the risks of this type of assignment.” For your “Conference on Demand Pack” of “Valuing a Very Small Company,” including transcript, CD, ancillary reading materials, MP3 recording, and more, click here.