BVR’s own Sherrye Henry comments that the number of material legal cases decided on matters of business valuation has been increasing dramatically—anecdotally as much as 50% over a year ago.
Partially, the increase has occurred because valuation issues are considered in more areas of the bar. So, “I attribute some of the increase in valuation cases to BVU’s own expansion of search terms over the years, from straight BV to lost profits, IP, reasonable comp, and more, says Henry.
But, legal and market trends are also involved. Henry, the Legal Editor for Business Valuation Update, offered BVW readers the following external reasons for this trend:
the increasing use of Daubert challenges; 2) the recession, in which valuation of securities and other “hard to value” assets have been at the core of bankruptcy, securities litigation, etc.,; 3) Intellectual property and other intangible assets becoming more the focus of valuation than bricks and mortar; 4) FASB and fair value accounting also putting new focus on valuation; 5) the maturity of the valuation profession and with it, courts and the case law on valuation.“Possibly the only way the recession has tamped down the number of cases is in the tax realm, because the IRS is perhaps more strapped for funds to litigate cases,” Henry believes. “Otherwise, I’m just not seeing a downtrend anywhere. If the economic sky is indeed falling these days, Chicken Little is probably out running around hiring an attorney first, and a valuation expert next….”