Trugman reveals the ‘easiest trap’ in a valuation engagement

BVWireIssue #231-1
December 1, 2021

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business valuation profession, valuation report, valuation methods

BVWire has been getting a sneak peek at some of the revised chapters in the new, sixth edition of Understanding Business Valuation by Gary Trugman (Trugman Valuation). The book is known for its real-world examples and practical advice based on the author’s many years of experience. In one chapter, he reveals that the “easiest trap” to fall into in a valuation engagement is when the attorney asks the analyst for a ballpark opinion. “Next thing the analyst knows, the so-called ‘ballpark’ becomes an expert report without the analyst even realizing that it has been submitted to the other side in a litigation,” Trugman writes. Imagine yourself trying to explain to the court why you did a calculation of value when a full valuation engagement was called for.

What to do: To avoid this trap, the engagement letter and report must be crystal clear regarding what the valuation analyst will and will not do and what restrictions are placed on the use of the report, he advises.

Trugman’s book will be available in early 2022, and you can preorder if you click here. Note: If you are a subscriber to BVResearch Pro or BVR’s Digital Library, the book will be included with your subscription, so there is no need for you to preorder.

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