July 27, 2012

How To Have A Good Day in Court

Well, if you’re facing a divorce, or a business partnership separation, there might be no such thing as a “good day in court”; stipulated. But there are several ways that you can have a bad day in court, and most of them are preventable. If you are in a difficult situation that needs to be […]

Well, if you’re facing a divorce, or a business partnership separation, there might be no such thing as a “good day in court”; stipulated.

But there are several ways that you can have a bad day in court, and most of them are preventable.

The truth, the whole truth, etc…

If you are in a difficult situation that needs to be resolved in a court of law, one of the most important things that you can do is to ensure that you provide yourself with as much information as is necessary to sell your case to the court.

And if the information that is needed is the value of a business, you’re not giving yourself a chance to be successful if you don’t obtain a proper valuation, or think that your opinion of what the business is worth should be sufficient.

I was recently asked to testify in a divorce case as to the value of a business. Declining industry, poor outlook, and my value was very low- a few thousand dollars. The spouse of my client had different ideas; in that person’s mind, since the business grossed over a million dollars in one year a long time ago, the business must clearly be worth $1 million.

Worse (for that person), s/he decided that his/her opinion should be sufficient, and therefore did not hire an opposing expert.

Was I upset by that? Not really; I got to defend my opinion of value against what ultimately was an uninformed, back-of-the-napkin valuation. With a dozen or more issues to debate and fight over, my client was at least able to know that a well-reasoned, properly done valuation resulted in a conclusion of value of the business that the court was able to understand, and more importantly, rely on.

I have to admit that I wondered for at least a few days afterward about what went into the decision of not hiring an expert. Not that I wanted to have a more challenging time in court, but it was fascinating to me that someone in a court proceeding with so many long-lasting implications would not avail him/herself of the information needed to attempt to make an informed argument.

The obvious moral of the story- if you are ever in this situation (or one like it), information is key. A judge/jury will be more than likely to side with you if you have objective, “defendable” information on your side, as opposed to an entirely subjective “valuation”, that is grounded in, and motivated by, a host of factors and emotions that, while significant to the overall situation, might not be relevant in the context of determining the value of a business.

Cheers…

A few thoughts: