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"How to Value a Business When Data and Cooperation are Not Forthcoming from Management: An In-Depth Explanation of Forensic Business Valuations"

Recently published in "Orange County Lawyer," the official publication of the Orange County Bar Association. *

by Chris Hamilton, CPA, CFE, CVA, DABFA.

A“normal” valuation requires a tremendous amount of time, concentration, and objectivity by the appraiser. Under the best of circumstances, having a business appraised is a highly invasive process that is time consuming and involves providing a total stranger (the appraiser) all of the intimate financial, management, and competitive information for the firm. However, if the owner and/or senior management of the business chooses not to participate in the process or, worse, chooses to impede or disrupt the process, it becomes unpleasant for everyone involved. An appraisal usually depends on the assistance of management and the supply of accurate and reliable information. Where that assistance and/or information is not available, the appraiser is forced to take a forensic approach. The forensic approach to business valuation will not only require more time and creativity, both in the analysis and in supporting the conclusion of value, but must be accomplished without compromising the objectivity of the analysis. This article discusses how to accomplish the appraisal engagement in spite of the lack of readily available information and assistance on behalf of the business being appraised.

(click here for complete article)