You should be aware of the standards all of the business valuation organizations have issued, not just your own, cautions Jim Hitchner (Financial Valuation Advisors) in the April issue of Hardball With Hitchner. To illustrate, he presents a line of questioning you may get in a deposition (we’ve paraphrased a little):
Attorney: Do you belong to X? (X can be the AICPA, ASA, NACVA, RICS, or any of the other BV organizations)
Attorney: Do you believe X is a reputable organization, particularly on the business valuation side?
Attorney: X issues business valuation standards, is that correct?
Attorney: Does your analysis and report conform with the X business valuation standards?
Analyst: I don’t know. I do not have to comply with the X standards since I do not belong to that organization.
Attorney: Here is a copy of the business valuation standards issued by X, the same organization you just said was reputable. I want you to turn to page 4 of your report. I will start asking you whether various parts of your analysis and report comply with the X standards in your hand. The first one is …
See what he means? To avoid being put on the hot seat, be aware of the other BV standards. In the Hardball issue, Hitchner presents many other common questions expert witnesses may be asked and some strong (and weak) answers to those questions. Hardball With Hitchner is a monthly publication. For subscription information, click here.
Extra: For a refresher on all of the BV standards, tune into an upcoming webinar, Review and Update of BV Standards and Guidance—What You Need to Know, with Jim Alerding (Alerding Consulting LLC) on May 11.