How can two highly qualified credentialed experts come up with such different numbers? That question was on the very first slide of a presentation by a panel of judges at the recent annual conference of the National Association of Certified Valuators and Analysts (NACVA) in Chicago. This question reflects a perception that valuation experts are hired guns. Why else would the two sides be so far apart?
Two reasons: “Assumptions and advocacy,” says Michael Kaplan (Kaplan Forensics), who moderated the session. Of course, different legitimate assumptions about the many variables and inputs in a business valuation can affect the opinion of value. The problem is when experts fall into the trap of becoming an advocate. One of the circumstances that encourages advocacy is the “belief that there is no truth—there is merely perception,” Kaplan notes. Sometimes, the attorney on the case will “reshape truth into advocacy” by selecting an expert who can be “led astray” or by withholding important evidence or providing unreasonable assumptions. Experts need to challenge the evidence and assumptions and must approach the valuation from a purely objective standpoint, Kaplan says.
The panel consisted of Judge Christopher Yates (Circuit Court; Kent County, Mich.) and Judge Steven I. Platt (retired full-time Circuit Court judge in Maryland). The session was titled, “Experts Sabotaging Themselves in Court—The Judges Tell All.” But Judge Platt noted that they would not exactly be telling all, otherwise they’d have to assert their Fifth Amendment rights, he quipped.
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