Gaetano Ferro (Marvin, Ferro, Barndollar & Roberts LLC) told attorneys and business appraisers at the AAML/AICPA biennial Business Valuation conference in Las Vegas last week that he thought judicial analysis of business valuation testimony (and experts) in matrimonial cases continues to be “rudimentary…the focus is often on the credentials of the valuation expert instead of the substance of the expert opinion.”
Daubert aside, Ferro believes that fewer divorce cases specifically discuss valuation. Some states, of course (e.g., CT) do not require the trial judge to find the value of each asset. But, “to a larger extent, this may be because trial judges simply find a value without explanation.”
One possible explanation, from Ferro’s attorney-perspective: BV may be getting more adversarial, less independent. “Opinions of value are often miles apart,” Ferro said. “Because it is extremely difficult to negotiate a settlement where the business is a significant asset and the experts report widely disparate values, the effect of adversarial valuations is to make trial more likely.”
Would a Major League baseball arbitration “high-low” rule—i.e., one that forces judges to accept the valuation of one appraiser instead of cobbling a value from the two—persuade the experts to moderate their opinions? Maybe not, Ferro said, “but some (many?) judges seem to be doing that, even in the absence of such a rule.
(By the way, a quick search of BVLaw shows that over the past two years, at least 40 valuation-specific divorce decisions have been reported among U.S. appellate courts—with new cases coming in each month. And, there will be a special case law update session, along with a judges’ panel, at the BVR/Morningstar 3rd Annual Summit on Business Valuation in Divorce September 13-14 in Chicago.)