Unlocking the Power of Jointly Retained Valuation Experts in Disputes
By Sean Saari, CPA, ABV, CVA, MBA, Partner, Advisory Services
In legal battles, animosity between opposing parties can often reach staggering heights, leaving little hope for common ground. The mere idea of agreeing appears elusive. Yet, there is a more strategic approach.
Enter the concept of jointly retained valuation experts—a powerful tool often overlooked but, ironically, most beneficial precisely in situations where discord seems insurmountable. In these very scenarios, where emotions run high, and rationality falters, utilizing a shared valuation expert can be a game-changer. Nowhere is this truer than in the context of a divorce or a dispute among the owners of a business.
Here are some of the potential benefits of a jointly retained valuation expert:
As the name implies, the costs for a jointly retained expert are normally shared by the parties involved. Therefore, each party is effectively receiving a 50% discount compared to the expense of hiring their own independent appraisers. In addition to these savings, if the parties agree to be bound by the value determined by the joint expert, significant fees can be saved by avoiding the lengthy battle that can ensue arguing over which expert’s report is more reliable. It is not uncommon for these costs to be significantly more than the cost of having the valuation report itself prepared.
Minimization of “Hired Gun” Image
Even if the valuation expert retained by a single party offers a completely unbiased opinion, there may still be a perception that they are a “hired gun” for the retaining party. Using a joint appraiser minimizes this perception (whether real or not) since it has more of an unbiased appearance by nature.
Disagreements over valuations can significantly lengthen a lawsuit (which increases fees, as noted already). Therefore, not only does the joint retention of an appraiser reduce potential costs, but it can also bring the dispute to a more expeditious conclusion and allow the parties to return to their everyday responsibilities sooner than they might have otherwise.
In contentious disputes, the concept of jointly retained valuation experts is often overlooked. By sharing the financial burden and avoiding costly conflicts over competing reports, parties benefit from a more than 50% cost reduction compared to hiring independent appraisers. Moreover, using a joint expert dispels the perception of bias, fostering an environment conducive to constructive discussion and negotiation. Accelerating the resolution process, this approach spares parties from protracted legal entanglements and affords them the closure they seek.