Valuation Issues from
the Legal Perspective
WILLIAM H. DUNN
There are various situations in which the value of a business is important in resolving legal questions. As in any other valuation context, such value is normally established by expert opinion. Some of the situations discussed in this chapter are eminent domain, divorce, estate planning, and agreements for buyouts between business co-owners and between buyer and seller.
Even though valuation questions may be, and hopefully will be, resolved without litigation, such a possibility must always be kept in mind. The parties should be ready if that becomes the default solution. Litigation is conducted in an adversarial mode, with two or more sides contending against each other. As to the value of a business, one side contends it is high and the other that it is low. If the parties could agree on value, then no litigation would be necessary as to that issue.
In any litigation, an awareness of the legal process is necessary. Contested factual matters are resolved by trial before a trier of fact, either judge or jury. In general, a jury will tend to be less analytic, dispassionate, and knowledgeable than a judge. The approach in presenting the case will vary accordingly.
The same basic principles of valuation that are set forth elsewhere in this book apply in litigation. Statutes and judicial decisions relating