This webinar discusses selecting the right valuation expert. It explores when a valuation expert is needed, typically for litigation or transactions requiring independent appraisals. The webinar covers how to evaluate an expert's credentials and experience, and whether communications with an expert are privileged. It also describes what an expert report entails and standards experts must meet. Lastly, it provides suggestions for valuation experts, such as adequately establishing credentials and being familiar with the relevant industry.

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Practical and entertaining education for
attorneys, accountants, business owners and
executives, and investors.

3. Disclaimer
The material in this webinar is for informational purposes only. It should not be considered
legal, financial or other professional advice. You should consult with an attorney or other
appropriate professional to determine what may be best for your individual needs. While
Financial Poise™ takes reasonable steps to ensure that information it publishes is accurate,
Financial Poise™ makes no guaranty in this regard.
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5. Meet the Faculty
MODERATOR:
John Levitske - Ankura Consulting Group, LLC
PANELISTS:
Michael Pakter - Gould & Pakter Associates LLP
Janel Dressen - Anthony Ostlund Baer & Louwagie P.A.
Terri Lastovka - Valuation & Litigation Consulting, LLC
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6. About This Webinar
Selecting the Right Valuation Expert
You have a business interest, an asset, or a potential liability that you need to value. When do
you need a valuation expert? While some negotiations or transactions may require an
independent third party for appraisals, nearly all litigation on these topics will require an
expert. How do you evaluate the credentials of an expert? What type of experience will you
need your expert to possess? The process of selecting the appropriate expert starts with
identifying the issues in dispute. This webinar explores the key factors you should consider in
choosing your valuation expert.
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7. About This Series
Valuation 2021
What’s it worth? Whether you are engaged in the sale of an asset or attempting to recover damages in
litigation, valuations are often necessary for convincing the other side that your price is right. In
transactions, valuations assist parties in determining the price they are willing to pay or receive in the sale
of a security, business, or asset. In litigation, valuations play a critical role in setting a baseline for
damages awards. Expert assistance is required to accurately value many assets, whether it is a
business, a security, an intangible asset such as intellectual property or a brand, or lost profits in a
litigation context. Choosing the appropriate valuation expert can make or break your transaction or your
case, given the extensive battles between valuation experts that arise in contested matters. This series
provides an overview of valuation in its many contexts, from business valuations in transactions to battles
between valuation experts in all aspects of litigation.
Each Financial Poise Webinar is delivered in Plain English, understandable to investors, business owners, and
executives without much background in these areas, yet is of primary value to attorneys, accountants, and other
seasoned professionals. Each episode brings you into engaging, sometimes humorous, conversations designed to
entertain as it teaches. Each episode in the series is designed to be viewed independently of the other episodes so that
participants will enhance their knowledge of this area whether they attend one, some, or all episodes.
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8. Episodes in this Series
#1: What's it Worth? Valuing a Business for Sale
Premiere date: 2/3/21
#2: Valuing Lost Profits for Litigation Purposes
Premiere date: 3/3/21
#3: Selecting the Right Valuation Expert
Premiere date: 4/7/21
#4: Minority and Illiquidity Discounts
Premiere date: 5/5/21
#5: Valuing Your Brand and Other "Soft" Assets
Premiere date: 6/2/21
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9. Episode #3
Selecting the Right Valuation Expert
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10. Agenda
1. When should you think about engaging a valuation expert?
2. How do you find a “good” valuation expert?
3. Are communications with a valuation expert “privileged”?
4. What is an expert report by a valuation expert?
5. Can a valuation expert be used in other types of dispute resolution other than litigation?
6. What are some suggestions you have for valuation experts in litigation to potentially
consider?
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11. 1. When should you think about engaging a valuation
expert?
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12. What Role Does an Expert Play in Litigation? Do I
Need One?
 Is an expert needed?
 If yes, what kind of expert do you need?
 If no, is it best practice to hire an expert anyhow?
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13. Who Requests a Valuation?
• Who will be the user(s) of the valuation?
• Third parties (sometimes reliance, sometimes not)
 Court, attorneys (investigations, disputes, contractual requirements)
 Investors (disputes, buy-sell agreements, related party transactions)
 Banks (collateral, other financing, solvency)
 Trustees – ESOPS, bankruptcy, other (related party, transactions, 3rd-party
transactions)
 Government (tax, DOJ, or other regulatory)
 Companies, auditors, and their advisors (tax accountants, tax attorneys,
bankers)
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14. Nature of the Assignment
• Purpose of the Valuation:
 Compliance
 Financial, tax or investor reporting
 Litigation
 Dispute resolution
 Bankruptcy
 Solvency
 Buy-sell agreements
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15. 2. How do you find a “good” valuation expert?
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16. Expert Witness
 Provide an objective and independent perspective before a trier of fact – at a deposition,
before a court, or in arbitration
 A designated expert’s work is frequently discoverable including correspondence,
notes, analyses, research, drafts, and workpapers.
 It is important to realize this at the outset of an engagement
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17. Nature of the Assignment
• Class of Asset/Liability
 Business enterprise or intangible asset
 Real estate
 Personal property
 Financial instruments and liabilities
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18. Expert Qualifications
 An expert must demonstrate:
 The requisite training, skill, knowledge, and/or experience in the field
 The facts, data, assumptions and other documentation that were relied upon in
forming conclusions and opinions
 The basis for the conclusions and opinions, including the methodology used
 Is the expert qualified to provide an opinion, when there may be possible expansions in
scope?
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19. 3. Are communications with a valuation expert “privileged?”
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20. Privileged Communication
 Understand the difference between a testifying witness and a non-testifying witness and
how that can impact privilege or other protections
 Attorney-client privilege and work product doctrine protection apply in different
circumstances
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21. Testifying Witness
• Fed. R. Civ. P. 26(b)(4)(C) provides
(4) Trial Preparation: Experts……
(C) Trial-Preparation Protection for Communications Between a Party's Attorney and Expert
Witnesses. Rules 26(b)(3)(A) and (B) protect communications between the party's attorney and
any witness required to provide a report under Rule 26(a)(2)(B), regardless of the form of the
communications, except to the extent that the communications:
(i) relate to compensation for the expert's study or testimony;
(ii) identify facts or data that the party's attorney provided and that the expert considered in
forming the opinions to be expressed; or
(iii) identify assumptions that the party's attorney provided and that the expert relied on in
forming the opinions to be expressed.
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22. Expert Consultant
 Provides research, discovery, analysis, and may assist in fact finding, strategy, and
identifying potential issues
 Does not usually provide testimony, unless the consulting expert becomes
designated as an expert witness
 The work of a consultant is generally considered attorney work product and
protected from discovery (when attorney engages the consultant)
 If the consultant becomes a testifying witness, all prior work might be discoverable
including that performed while a consultant
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23. Non-Testifying Expert
 Communications with a non-testifying expert can be privileged when:
 Communication occurs for purposes of obtaining or dispensing legal advice
 Non-testifying expert is understood to be working as an agent of either the client
or the attorney. See, e.g., U.S. v. Kovel, 296 F.2d 918, 922 (2nd
Cir. 1961); Golden
Trade v. Lee Ansrael Co., 143 F.R.D. 514, 518 (S.D.N.Y. 1992)
 Fed. R. Civ. P. 26(b)(4)(D) distinguishes between discoverability “facts or
opinions” of testifying vs. non-testifying witnesses
o Facts or opinions of non-testifying witnesses are only discoverable under
“exceptional circumstances”
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24. 4. What is an expert report by a valuation expert?
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25. Expert Reports
 Fed. R. Civ. P. 26(b)(4)(B) limited discovery of draft expert reports
 Reports must contain:
 A complete statement of all opinions the witness will express and the basis and reasons for
them;
 The facts or data considered by the witness in forming them;
 Any exhibits that will be used to summarize or support them;
 The witness’s qualifications, including a list of all publications authored in the previous 10
years;
 A list of all other cases in which, during the previous 4 years, the witness testified as an
expert at trial or by deposition; and
 A statement of the compensation to be paid for the study and testimony in the case.
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26. How to Improve the Expert Report?
 Ensure it has all the required elements under the law
 Ensure that all documents reviewed by the expert must be recorded (usually by bates-
stamping)
 Double-check all assumptions listed in the expert report
 Report should avoid absolute working and phrasing, but also avoid “hedge” words of
phrases such as “somewhat” or “sort of”
 Avoid argumentative language or comments on the credibility of other witnesses
 The scope of the report should be defined in the expert’s engagement letter
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27. Challenges to Expert Testimony
 Must the expert be qualified by the court?
 What standards must the expert follow or meet?
 What kind of work product and methodology is expected of the expert?
 What methodology will the expert use?
 What care/precautions should the lawyer take when preparing and working with the
expert?
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28. Examples of Accrediting Organizations
• All disciplines
 American Society of Appraisers (ASA)
 Royal Institute of Chartered Surveyors
• Business and Intangible Valuation
 American Institute of CPAs
 CFA Institute – Chartered Financial Analyst (CFA)
 Institute of Business Appraisers
 National Association of Certified Valuation Analysts (CVA)
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29. Standards for Expert Testimony
 Frye – demonstrate expertise and apply methods/theories that are generally accepted
 Federal Rule of Evidence 702 – a qualified expert may testify if the testimony is relevant
and rests on reliable foundation
 Experts are to use their “scientific, technical, or other specialized knowledge” to help the
trier of fact in understanding the evidence or determining a fact in issue
 Daubert – Federal Rule of Evidence 702 superseded Frye and concluded that methods
do not have to be generally accepted as long as testimony is relevant and reliable
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30. Daubert/Frye Challenge to Expert Witness
 The judge is the gatekeeper and considers the Daubert factors to determine
admissibility of an expert’s testimony
 Theory or technique used can be or has been tested
 Theory or technique has been subjected to peer review
 Potential error rate is determinable, or standards exist for error rate that is
acceptable, and
 Theory or technique enjoys widespread acceptance in the profession
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31. Preparation for a Daubert Challenge
 Know and apply the standards
 Know the relevant professional literature
 Know the professional organizations
 Use generally accepted methods
 Consider multiple analytical methods
 Synthesize your conclusion
 Support your position
 Disclose all analytical assumptions and variables
 Subject the analysis to peer review
 Test the analysis and conclusion for reasonableness
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32. 5. Can a valuation expert be used in other types of dispute
resolution other than litigation?
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33. Experts in Mediation
 Engage with the expert witness in selecting the right mediator
 Budget adequate preparation time with expert witness prior to mediation
 Be aware of potential waiver of any confidentiality or work product by prematurely
disclosing the expert witness’s or your own work product to the opposition
 Label all information provided to your expert witness prior to mediation “for
settlement purposes only” or similar limiting language
 Expert witness who has been given access to the parties’ mediation statements, if
deemed covered by settlement purposes privileges, should also understand that
information contained in these memoranda may not later be used by expert witness in
future reports or testimony
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34. Experts in Arbitration
 Arbitration does not necessarily mean the standards and burdens of proof are less
 Sometimes, is an opportunity to use an expert who may not qualify as an “expert
witness” under Daubert standards
 Still useful in most circumstances to use an expert who would qualify, as he or
she may be considered more reliable by the arbitrator
 Reports can go through several drafts without fear of discovery under limited discovery
rules
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35. Cost Considerations
 Expert reports can get expensive, especially through trial
 Could consider options such as a scaled report for preliminary matters such as
mediation or other settlement process, then a full-scale version for litigation
 Occasionally, your matter may allow use of a less-experienced expert, which may be
less expensive
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36. 6. What are some suggestions you have for valuation experts
in litigation to potentially consider?
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37. Direct Examination
 Adequately establish the expert’s credentials
 Describe the scope of the work
 Go through the proper technical or factual background underlying the expert’s
conclusions
 Use demonstrative evidence to illustrate the testimony
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38. Serving as an Expert Witness in Valuation
• What to do:
 Understand the factual basis of the case
 Be consistent
 Be familiar with the relevant agreements
 Visit the business and become very familiar with the industry’s market
 Know the academic, case law or market support for discretionary decisions
 Interview management and keep supportive notes
 Question inconsistent information received from management
 Participate in a mock cross-examination
 Ask client “what do I not know that could impact my opinion”
 Understand that your files, including your notes, emails, invoices and calendar
entries, may be discoverable
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39. Serving as an Expert Witness in Valuation
• What NOT to do:
 Critique a decision point that you have followed in other similar cases
 Take inconsistent positions within the same case
 Ignore prior reports and testimony without justified reason (by you or third-parties)
 Grossly understate or overstate value
 Limit your market/industry research to on-line resources
 Ignore the valuation date- what’s your position on post-valuation date evidence and
what is the supported basis for your opinion?
 Ignore public and private information about the company- what it has said about
itself, what information it has provided to its bankers/lenders, investors, etc.
 When testifying, while confidence is important, check your ego at the door
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40. About the Faculty
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41. About The Faculty
John Levitske - John.Levitske@Ankura.com
John Levitske, CPA/ABV/CFF/CGMA, ASA, CFA, CFLC, CIRA, MBA JD serves as a
business valuation, forensic accounting and damages expert witness, arbitrator, and advisor.
He provides business valuation, forensic accounting, purchase price analysis, damage
quantification, and dispute resolution services in complex commercial situations. He testifies
as an independent expert witness in disputes, both domestic litigation and international
arbitration, regarding issues of valuation, finance, accounting (e.g., GAAP) or damages. He
also acts as a neutral expert determiner or neutral arbitrator and advises clients in mediations
and negotiations. He is frequently consulted regarding business disputes, shareholder
disputes, M&A transaction disputes and bankruptcy.
To read more, go to https://www.financialpoise.com/webinar-faculty/john-levitske/
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42. About The Faculty
Michael D. Pakter - mpakter@litcpa.com
Mr. Michael D. Pakter has 40 years of experience in accounting and forensic accounting, business
economics and investigations in numerous industries and diverse engagements, including more than 20
years of experience in economic damages and business valuations.
He has participated in public hearings and alternative dispute resolutions, submitted expert reports in
several jurisdictions and testified in arbitrations, regulatory proceedings and litigated disputes. State,
Federal and Bankruptcy Courts, as well as arbitral bodies, have recognized him as an expert in
accounting, financial analysis, forensic accounting, economic damages, business valuation and business
economics.
Mr. Pakter is a Certified Public Accountant (“CPA”), registered and licensed in the State of Illinois. The
American Institute of Certified Public Accountants (“AICPA”) has recognized him as additionally Certified
in Financial Forensics (“CFF”) and Management Accounting (“CGMA”). He can be reached
at312.229.1720, mpakter@litcpa.com or via www.litcpa.com.
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43. About The Faculty
Janel Dressen - jdressen@anthonyostlund.com
Janel Dressen has 18 years of experience as a trial lawyer. She thrives as an advocate for her
clients needing counsel and representation to resolve their business related ownership and
employment disputes. Her top two strengths being “achiever” and “focus” means if you need to
get something done, Janel will get it done for you with attention to the important details. Janel
prides herself on being the most prepared person in the room, solving problems that lawyers and
clients refer to as “challenging” and getting to know her clients and their businesses as much as
they do. Janel’s clients can expect to receive focus, determination and desire for excellence when
working with her.
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44. About The Faculty
Terri Lastovka - lastovka@valueohio.com
Terri Lastovka is a valuation specialist at VLC. She is a Certified Public Accountant, an Attorney,
and an Accredited Senior Appraiser along with being accredited in Appraisal Review &
Management in Business Valuation with the American Society of Appraisers. She is also a
Certified Domestic Relations Mediator (through the Supreme Court of Ohio) and a Certified
Commercial Arbitrator (through the American Arbitration Association). Terri has more than 30
years experience where she has consulted in the areas of business practices, financial
considerations and tax issues as well as collateral monitoring, business succession, and workout.
She also spent several years in industry as CFO of a chemical distributor.
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45. Questions or Comments?
If you have any questions about this webinar that you did not get to ask during the live
premiere, or if you are watching this webinar On Demand, please do not hesitate to email us
at info@financialpoise.com with any questions or comments you may have. Please include
the name of the webinar in your email and we will do our best to provide a timely response.
IMPORTANT NOTE: The material in this presentation is for general educational purposes
only. It has been prepared primarily for attorneys and accountants for use in the pursuit of
their continuing legal education and continuing professional education.
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46. About Financial Poise
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