In EFFECTIVE VALUATION & LITIGATION SUPPORT IN CORPORATE SECURITIES LAWSUITS, forensic accounting expert witness Richard M. Squar, CPA, CVA, ABV, CFF, MBA-Taxation, writes:
LITIGATION SUPPORT FROM THE BUSINESS VALUATION EXPERT
What characteristics and support does the effective valuation expert provide to the board of directors in corporate securities litigation that is a tremendous asset in the case?
ATTRIBUTES OF THE EFFECTIVE VALUATION EXPERT
Personal Characteristics • Maintains a sense of self • Intelligent, uses sound judgment and objectivity
• Resourceful • Communication skills • Demeanor • Handles stress • Open-minded • Patient • Professional attitude
Professional Characteristics • Competency • Previous litigation experience • Real-world transactional experience • Academic background • Recognized professional designations/active involvement • Independent and unbiased
• Considerable professional judgment • Consistent with prior case testimony •
The expert always maintains a sense of self with confidence and professional behavior. The valuation and/or damages opinion rendered on the witness stand is the expert’s, not someone trying to be who they are not. Communication skills are vital. Success is when the expert can verbally support the rationale for conclusions independently reached.
A calm demeanor conveys competence and self-confidence. The valuation expert possesses the ability to think and communicate clearly and assertively while under pressure. Effective expert witnesses are able to see both sides of an issue and are willing to concede a point if justified. The patient, skilled expert witness listens and considers each attorney’s question before answering. A professional attitude maintained by the expert allows acceptance of criticism during cross-examination without taking it personally.
Although previous litigation experience is invaluable, the effectiveness of the valuation expert is enhanced by experiences in real-world transactions involving purchases and/or sales of businesses. Academically, the valuation expert is a high achiever in endeavors providing the requisite background in the fields important to business valuation. Professional certifications such as affiliation with the American Society of Appraisers with business valuation designation, Certified Public Accountant, Chartered Financial Analyst, and member of National Association of Certified Valuation Analysts only available to Certified Public Accountants are qualifying factors for the expert. Active involvement by attending current seminars in these types of organizations is recommended.
The valuation expert maintains independence and is unbiased throughout the case. An independent appraiser advocates only his or her position, and does not advocate for the client. The valuation expert’s opinion must be presented honestly in an unbiased manner without advocating differing client positions. Certainly the expert can assist the client and attorney in preparing the best possible case. There must be no actual or perceived bias on the part of the valuation expert.
The testimony of the effective valuation expert must be consistent with prior testimony. Expert testimony is part of public records and an attorney can easily extract prior testimony to possibly uncover contrary opinions of the expert. Certainly each case is different, but the expert’s testimony can be discredited by opposing counsel by showing the expert previously testified to an opposite conclusion in an earlier case.
Richard M. Squar has over 23 years experience in public accounting providing expert advice in the areas of business valuations and litigation support; corporate, partnership and individual tax planning and representation before taxing authorities; and profit enhancement.