Valuation and Litigation Insights (curated by Grobstein Teeple, LLP)

Hello

Welcome to the eighth issue of Valuation and Litigation Insights! My goal is to bring you hand-picked content related to all things valuation and litigation that will make your life easier and to help your clients get the results they deserve.

A year into COVID, we look back at what worked and what didn't in how valuation professionals tried to deal with the pandemic in forming their opinions. We also look at recent business interruption trends in light of COVID. More sophisticated claims are being filed, though insurers have mostly prevailed.

We also dive into how a business valuator might "rig" a valuation. At the same time, we look at how business appraisers might arrive at very different opinions of value through reasons that have nothing to do with bias.

Finally, we look at best practices in calculating damages for an early-stage company -- always a tricky endeavor.

Hope you enjoy this issue and find it useful!

News and Trends

StraightTalk Webinar Series—March 2021 | QuickRead | News for the Financial Consulting ProfessionalQuickRead | News for the Financial Consulting Professional

COVID-19 changed the way business valuators thought and did a lot of things. One year out, business valuation and damages thought leader Jim Hitchner shares his thoughts on what worked and what didn't. Since COVID-19 will impact valuation and damages calculations for some time, this is a must-read.

Businesses Filing More COVID Lawsuits and the Stakes are Higher

The anniversary of COVID-19 shutdown orders brought an upturn in both the number of business interruption lawsuits against insurers and the amount of damages they are claiming. Larger and more sophisticated filings are happening, as a lot of businesses have waited on the sidelines to see how things progressed before filing suit.

Businesses Are Losing Their Covid-19 Lawsuits Against Insurers - Bloomberg

At the same time, the majority of business interruption decisions have mostly been favorable to carriers. According to the University of Pennsylvania Law School, which has developed a tool to track Covid-related litigation, the insurers have overwhelmingly won.

Things to Know

11 Tips on How to Spot a “Rigged” Business Valuation | The Art of Business Valuation:

There may be 50 ways to leave your lover, but there are at least 11 ways to rig a valuation. Business broker and appraiser Greg Caruso describes how an appraiser can, intentionally or not, "rig" a business valuation. The list is worthwhile to consider as you critically review a valuation.

Differing Expert Witness Valuation Conclusions | Chris Mercer

When two appraisals of the same business arrive at vastly different conclusions, this might well be the result of intentional bias at the hands of hired guns. But this is not necessarily the case. This article by Chris Mercer focuses on 6 sources of differences in expert opinions that are not due to advocacy or bias.

Seven Techniques to Consider When Calculating Damages for Early-Stage Companies | Business Valuation Resources

Determining damages for an early-stage business is particularly challenging -- the lack of historical results to use as support can easily result in a speculative conclusion. This article list seven key areas to consider when making these calculations. Whether you are reviewing your expert's report or one provided by the other side, you will want to read this article.

In Closing

That's it for now. If you found this issue of Valuation and Litigation Insights useful, please forward it to a friend or colleague.

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Talk to you soon!

Will Thomsen
Director of Valuation and Litigation Services
Grobstein Teeple, LLP
www.gtllp.com

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