Shareholder disputes: Involve a valuator early

Disputing shareholders frequently hold off calling in an expert as they try to rein in mounting professional fees and optimistically hope to settle their differences amicably. But this can lead to unnecessary haste and expense. The proactive use of valuators promotes efficient strategy and, ultimately, saves time and money. Valuators can help in the early stages of a shareholder dispute in several ways. They can:

Evaluate whether the benefits of litigation outweigh the costs - An appraiser can provide a preliminary value estimate. This rough-and-dirty figure can help determine whether pursuing the case is financially feasible. It can also be an objective eye-opener to frustrated shareholders who have unrealistic value perceptions.

Improve the efficacy of discovery - Without a valuator’s input during the discovery phase of a case, an attorney who represents a minority shareholder may obtain insufficient financial documentation or forget to request formal site visits. By involving an appraiser from the get-go, attorneys can avoid subsequent trips to court to request additional items.

Increase the likelihood of settlement - By comparing preliminary value estimates, disputing shareholders reveal their expectations and quantify differences. From there, valuators can pinpoint the precise sources of parties’ differences and focus litigants on specific financial grievances. Moreover, objective outside experts can help emotionally charged shareholders stay focused on financial issues.

Settlement isn’t always possible - If trial becomes unavoidable, valuation expertise provides a head start. In fact, much of the legwork will have already been completed by the time a trial date is set. And waiting until the last minute to hire an appraiser gives the judge and jury a bad impression.

Moreover, time-crunched experts are more likely to overlook key financial items or skip analytical procedures. When valuators are hired at the case’s onset, they have adequate time to perform comprehensive analyses of the facts.