In the published opinion in the groundbreaking recent Walsh v Bowers ESOP case, the court noted that the DOL’s valuation expert’s “failure to follow Uniform Standards of Professional Appraisal Practice (USPAP) introduced substantial errors into [his] analysis.” For example, the expert did not do a management interview, which violates USPAP’s scope of work and competency rules.

Ken Pia (Marcum LLP) and Ian Rusk (Rusk O’Brien Gido + Partners LLC), who testified for the defense, recognized that it is sometimes difficult to do an interview in the context of litigation, but there are other ways of collecting the needed information. For example, management can answer questions in a deposition. Also, the court can order the other side to submit to a management interview.

The December issue of Business Valuation Update has an article that gives more insights from Pia and Rusk on the ESOP valuation issues in the case.