Business Valuation Expert Witness Testimony Allowed in Part in Securities Lawsuit

Summary: Business Valuation Expert Witness testimony allowed in part because the plaintiff’s charge that Dr. Finnerty relied on unknown information should be discussed on cross-examination.

Facts:  This case (Overwell Harvest, Limited v. Widerhorn et al – United States District Court – Northern District of Illinois – December 2, 2022) involves a securities lawsuit.  The plaintiff, Overwell Harvest Limited, filed a lawsuit against the defendants alleging various breaches of fiduciary duties related to the sale of Neurensic.  In order to prove their case, the plaintiff hired Business Valuation Expert Witness Dr. John Finnerty to provide expert testimony.  The defendant has filed a motion to exclude this expert from testifying.

Discussion:  The defendant alleges that Dr. Finnerty’s expert witness opinion is not relevant or reliable.  The court notes that Dr. Finnerty utilized a discounted cash flow analysis (“DCF”) to get to the fair market value of Neurensic’s assets when it was sold.  The defendant claims that Dr. Finnerty relied on unknown or unknowable information in order to conduct the analysis.

The court states that it is not clear whether Finnerty relied on unknowable information in his analysis of DCF and, it opines, arguments like these are best discussed during cross examination.  The court also notes that Finnerty did not come to his conclusions based on future events that were not known at the time that the asset was sold.

In addition, the defendant argues that Dr. Finnerty cherry picked information for his report, but ignored other important information.  The court responds to this by stating that this type of argument goes to the weight of the evidence, not the admissibility.

Also, the defendant alleges that Dr. Finnerty’s opinion about what the Directors “should have done” or what the plaintiff “should have bid” should be excluded because these opinions will not assist the trier of fact in this case.  The court determined that Finnerty will not be allowed to testify about whether the directors prevented Overwell from submitting another bid.

Conclusion:  The motion to exclude the expert witness opinion of Dr. John Finnerty is granted in part and denied in part.