Magazine article The CPA Journal

Using Valuation Software to Resolve Litigation

Magazine article The CPA Journal

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. …

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