CONTROLLING COST AND CONTENTION AROUND EXPERT APPRAISALS
When your divorce involves a business owned by you or your spouse, or you and your spouse, the value of the business will most likely figure in the divorce. If you and your spouse disagree on the value of the business (which is often the case when one of you is buying the other out or when one spouse is to be paid a portion of the business’s value), the disputed value may be resolved by engaging a third party expert to calculate what the business is worth. This is called appraisal. Appraisal methods are several; these alternatives are themselves the subjects of many articles (Google “different ways to value a business”). This post focuses not on appraisal methodologies, but on ways divorcing parties can commission a fair appraisal in a way that is economical.
A scenario to be avoided is “expert opinion versus expert opinion,” where each of the parties in a litigated divorce hires an appraiser, the resulting appraisals are materially discrepant, and each appraiser must testify to explain his/her calculation. This can be avoided by hiring one appraiser who meets with both spouses to understand the perspective of each. Critical in this approach is to oblige the appraiser to be neutral, not favoring either party. This reduces conflict, stress and expense.
Another way divorcing parties can control expense is by choosing the type of report they want from the appraiser. Oral reports typically cost less than written reports.
Before starting work, the appraiser should be available to sit down with the parties and their lawyers to discuss any concerns they may have. Such concerns might include the valuation method to be used — one method might be more appropriate than another for a particular business — and any special considerations that might affect value.
The above approach can be implemented in a litigated divorce but is more common in a collaborative or mediated divorce, where the parties’ objective is to find a mutually acceptable result. What is more, appraisers generally charge less for their work in a collaborative or mediated divorce because they know that they will not be called upon to testify in court, which is very time consuming.