Dragnet and Defensible Valuations by Richard Pollack

Posted on January 02, 2013

Over the past 35 years Berkowitz Pollack Brant has built a strong and diverse business valuation practice. Our services are valuable for clients dealing with acquisitions, partnership disputes, government inquiries or other situations in which a representation of assets is required.

You may remember the television series “Dragnet” from the late 1960s and Sgt. Joe Friday using the catchphrase that will forever be attributed to him, “Just the facts, ma’am.” Perhaps this should be the catchphrase for the valuation profession as well. What is the goal in performing a valuation? To produce a defensible, and comprehensible, valuation report based on the facts that will satisfy the needs of the client and pass muster with the courts, IRS or others that will evaluate it.

A valuation should not only contain a thorough analysis and application of valuation methodologies, but also state the material facts. Each engagement clearly and concisely associates the facts with research, studies and analysis presented in the report. In order to give the users a complete and clear picture of the subject of a valuation, it is critical for the information to be understandable and presented with clarity. If the user cannot understand it, why would he or she want to rely on it or submit to the court, the IRS or others?

Users of valuation reports should ask the following questions:

The consequences of not submitting a defensible report can be grim – heightened scrutiny by the IRS, challenges by experts and a negative outcome for the client. A defensible valuation can avoid these pitfalls and aid in securing a positive result and ensure a happier client.

We have a department that solves problems for clients every day. How do you determine what services you need? Whether you are contemplating a sale, involved in the planning of your estate or to attempting to secure financing, our consultants can assist you. Call us today to learn more.

Article written by Sharon F. Foote, ASA, CFE.

Sharon is a supervisor in the Forensic and Business Valuation department and has been a valuable asset to the firm for over 10 years. She focuses her practice on family limited partnerships and real estate services. Sharon also assists in providing litigation services in marital dissolution, accounting investigations and product liability claims.