“I want experts who are very proficient in e-technology,” added Stephen Kolodny (Kolodny & Anteau, Beverly Hills). “A picture is worth a thousand words,” so an expert’s use of graphics and exhibits is critical to “telling the story” of the valuation at trial.
Do lawyers always use the same experts? “I tend to stick to the same experts because they have a lot of credibility—great traction with the judges,” Kolodny said. Likewise, Mayefsky draws from the same list of experts, “because bottom line, they are good.” Most of these experts have testified on both sides—for the plaintiffs and the defendants—and their integrity is sound. “If I can get you to shave your report you won’t work for me,” Kolodny said, “because that means you’ll shave it for someone else.”
Schiller keeps two different lists, one to handle standard matters and another for clients[AN1] <#_msocom_1> in the “upper-bracket” (above $20 million in assets). In the upper-bracket, he prefers to use experts who are “tops[AN2] <#_msocom_2> in their field.” The litigators agreed that special issues or industries in the case (e.g., hedge fund values, IP or IT) necessitate an analyst with the “embedded” expertise. Schiller will often enlist his consulting expert to find the top industry specialist and educate both the lawyer and appraiser on the unique issues of the industry. “[Such education] is invaluable,” he said. Mayefsky agreed: “When you have an unfamiliar or complicated industry, getting together a team approach is critical.”
“All this is great, but we live in the real world with clients paying real bills,” Sobel pointed out. Practicalities may prohibit or limit the availability of multiple experts on a given case. It may be terrific to have an expert who knows the particular industry, “but you’ve also got to have the expert who knows business valuation.” All else being equal, the expert who knows both the business and the industry will be the most persuasive, Schiller added. If you don’t know the industry, spend some time learning it—seek out trade associations, industry reports, and similar sources. At the same time, identify and prepare for questions regarding the “soft” or more vulnerable points of your BV analysis: revenues, expenses, earnings, and discount (or capitalization) rates; comparable or guideline companies; marketability and liquidity discounts; and minority discounts.