We see an increase in the use of joint business appraisals in divorce proceedings. Joint appraisals lower costs eliminating the need to hire multiple appraisers. Joint appraisals are also viewed favorably by the courts.
The parties involved and their attorneys want to know how CFAI handles a joint project as opposed to being retained by one side or the other. In terms of valuation methodology, we treat the valuation assignment the same no matter how we are retained. Our valuation conclusion is not influenced by how or by whom we are retained.
From our perspective, the main difference between a single or joint appraisal is largely administrative. The engagement letter is a three party agreement between both parties and our firm. We are careful to include attorneys on both sides in all conversations and copy both attorneys on all correspondence and emails. We make a point to interview both the active and inactive spouse about the company as part of our due diligence process. Our work product is sent to both parties at the same time and our files are open to inspection by either party. We recommend a written report in joint appraisals so that both sides can understand the information we relied upon, our methodology and underlying assumptions, and any adjustments made to the financial statements. Sometimes the attorneys involved hire another appraiser to review the joint appraisal; having a written report makes this process easier. If a written report is not desired (in an effort to keep costs down), once our analysis is done, we recommend a joint meeting or phone call where we can talk both parties through our appraisal to provide the same level of understanding provided by a report. Finally, we stand ready to answer follow on questions about the appraisal, again with both parties present.