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Alternative dispute resolution (ADR) (including arbitration and mediation) refers to legal procedures for resolving disputes outside the court system. ADR proceedings can offer the disputing parties certain advantages including faster resolution and potentially lower legal fees. Mediation continues to grow in popularity as a means of resolving legal disputes and allows the parties to air their grievances face-to-face in a confidential setting with the help of a skilled mediator. Arbitration is a form of adjudication in which the neutral decision-maker (the arbitrator) is not a judge or an official of an administrative agency. Unlike mediation where the disputing parties determine the result, in arbitration, the arbitrator resolves the dispute based on evidence or other submissions at a hearing. An arbitration resembles litigation more than mediation; however, it is less formal and more flexible than litigation. More and more disputing parties are choosing to settle their differences through ADR proceedings in an effort to expedite dispute resolutions and minimize legal costs. As a result, the need to hire a valuation professional as an expert in ADR proceedings has increased over the years. In mediation, a valuation expert can assist in analyzing the potential theories of the case, developing damage calculations, and evaluating the range of potential damages. In arbitration, there is greater flexibility in the valuation expert’s role because there are no evidentiary rules that limit whether an expert can be used. Arbitrators are generally subject matter experts in their own right, and they will likely understand the core concepts of the case. This allows the valuation expert to concentrate his/her testimony on complex matters. VSI’s valuation professionals are available and highly qualified to provide business valuation expert opinions in mediation, arbitration, or court proceedings.

Commercial litigation cases frequently involve claims for damages measured as lost profits or loss of business value. Such economic damages can occur in many different types of commercial litigation cases, including contract disputes, intellectual property infringement, business torts, unfair competition, and negligence claims. In commercial litigation, valuation professionals are often engaged as an expert to provide an opinion on the calculation of economic damages suffered by an alleged injured party. Economic damages are meant to return the plaintiff back to his/her financial position that the plaintiff would have been in, “but for” the defendant’s alleged harmful acts. In an economic damages calculation, the two typical methods used are either a lost profit or lost business value computation. When the alleged damage is for a finite period of time and is related to a separate identifiable cash flow, a lost profits approach is generally the appropriate method to use. This approach represents the difference between profits the plaintiff would have achieved, “but for” the harmful event, and profits actually attained. A lost profits analysis is commonly employed in breach of contract, intellectual property, and general commercial litigation cases. In situations where the loss of earnings is considered or assumed to be permanent and into perpetuity, or where a business is destroyed completely, a lost business value approach is generally appropriate. This approach is typically applied in business destruction, shareholder oppression, and dissenting shareholder cases.

End of life planning, transitions, and wealth transfer can sometimes create family feuds and discord. In reality, the more wealth being transferred usually means the more potential for family feuds. Every so often, unfortunately, those disputes lead to litigation. Trust and estate litigation has become increasingly common over the years, especially as the Baby Boomers continue to age. Conflicts arising between and among trustees, executors, beneficiaries, guardians, partners, agents (powers of attorney), and corporations are becoming commonplace. Trust and estate litigation matters come with unique challenges, often driven by complicated and interwoven legal, emotional, financial, and strategic issues. Estate litigation usually develops from beneficiaries contesting or attempting to nullify a will, estate, or trust. The purpose of a will contest is to obtain a legal ruling on whether the instrument is valid, as well as a verdict as to who is entitled to benefit from it. Trusts are another type of estate planning vehicle that often require litigation to resolve issues. Executors and trustees have responsibilities that require the utmost good faith, diligence, and prudence, and accordingly, they are said to hold a fiduciary duty, which requires them to not only act in good faith but also distribute assets properly and expeditiously. When there is a suspected breach of fiduciary duties, parties may seek to remove or change an executor or trustee, which sometimes lead to litigation. VSI is uniquely trained and well-positioned to work with plaintiffs, defendants, and as a financial neutral in trust and estate litigation.

Shareholder/partner disputes can be highly sensitive and complex. Shareholder disputes often involve a minority owner who believes he/she has been mistreated or disagrees with decisions made by the controlling owner. Occasionally, such disagreements can be too important to resolve peacefully and lead to costly and time-consuming litigation. The commotion caused by such a dispute can be disruptive for management and, therefore, have a deleterious effect on a business's value. Often, these disagreements lead to a minority shareholder or business partner to exit the company. If a conflict among business partners intensifies to such an extent, that the continuation of the enterprise may be compromised, buying out one of the parties may be a solution. During this buy-out process, the valuation of the shares of the enterprise becomes an important issue. Reaching an agreement between the parties regarding valuation and other financial issues can be particularly challenging. Business valuation experts often play an important role in resolving shareholder disputes by providing independent and unbiased opinions of value for the shares in question. It is crucial to retain business valuation experts who not only have a broad range of analytical and investigative skills, but who also bring to the table the ability to create a compelling, independent case. VSI has extensive experience working with business owners and their legal counsel as independent valuation experts where negotiations have either commenced or have broken down so that litigation has been initiated.

Valuing a business or a business interest in a divorce has become one of the most common reasons for engaging a business valuation professional. When a couple goes through a marital dissolution process, it is often necessary to determine the value of any privately-held business that they owned during the course of the marriage. As part of the divorce process, the assets and liabilities will have to be divided between the parties through a process called “equitable distribution.” Essentially, a court will classify property as either marital or separate, place a value on the property, and then distribute amongst the spouses. In many cases, one of the most contentious and difficult issues in a divorce proceeding is the valuation and distribution of marital property. This is particularly true when significant assets are involved or when the matter involves high-profile individuals. When the stakes are significant, it is important to work with valuation experts that have extensive experience, skills, and a track record of success. One question that can make a valuation more complex is the issue of personal and professional goodwill as a business asset. This goodwill can attach to the enterprise or to the working owner depending on the facts and circumstances surrounding the case. Business valuation professionals must also define a standard of value before proceeding with the valuation analysis. VSI’s team of experts have over 20 years of experience in advising attorneys and their clients in complex and demanding marital dissolution matters.

Business valuation expert witnesses can have a significant impact on the outcome of a litigation matter or an arbitration or mediation hearing. The importance of selecting the right expert witness is often underestimated – but it can be the most important decision an attorney makes in a case. Business valuation expert witnesses and consultants are often used in divorces, business dissolutions, economic losses, contract breaches, partner disputes, dissenting shareholders, and bankruptcies. Before selecting a business valuation expert witness or consultant, the attorney should consider whether they have experience as an expert witness, what professional designations they hold, their continuing education in areas such as business valuations, and their reputation as a valuation analyst. A valuation expert’s greatest asset is their reputation for objectivity. In large, complex cases, the valuation expert can provide an objective view, help find the relevant facts, strengths, and weaknesses of the case, and manage the disputing party’s expectations. For these reasons, hiring the right business valuation expert early on can be incredibly beneficial to building a strong case. VSI has extensive experience in assisting attorneys through all phases of litigation: pre-litigation planning, discovery, mediation, and trial/arbitration.