Using Valuation Software to Resolve Litigation

Article excerpt

At the heart of many business conflicts is the question of valnation: What is a given business worth? The question can arise in a number of situations that are inherently adversarial, such as a disagreement that leads to a partner's departure, or a sale of all or part of a business. Valuation software can be used to avoid bringing a valuation dilemma to court.

A typical case involved the partners of a $10 million manufacturing firm. One of the partners wanted to be bought out, the two parties could not agree on a price, and a dissenting shareholders suit followed. I was asked to help resolve the dispute. I suggested that I be engaged jointly as a nonbinding mediator, and the principals and their attorneys agreed. This was an important first step, for it created a safe, nonthreatening environment where the parties could work together.

The next step was to gather the necessary data about the business and prepare a preliminary report. I used ValuSource PRO from Wiley-ValuSource to generate a draft notebook, which I sent to both principals and their attorneys. It is significant that I used commercial software and not my own spreadsheets or other "homemade" tools. It emphasized that I was applying widely accepted industry standards and working toward an objective value that would be deemed fair by the business community. …