Certified Valuation Analyst CVA Litigation Support and Expert Testimony 2 — Questions and Answers
Question 1: A CVA testifying as an expert witness must comply with Federal Rule of Civil Procedure 26(a)(2)(B), which requires disclosure of:
- A written report containing all opinions, the basis and reasons, data relied upon, and compensation arrangements (Correct answer)
- Only a summary of the expert's conclusions in a one-page letter
- Opinions provided within 30 days of the trial date
- Only opinions that have not previously been disclosed in deposition
Correct answer: A written report containing all opinions, the basis and reasons, data relied upon, and compensation arrangements
FRCP 26(a)(2)(B) mandates a comprehensive expert report disclosing all opinions, supporting rationale, data, prior testimony, and compensation to enable opposing parties to prepare.
Question 2: During cross-examination, opposing counsel challenges a CVA's use of a 35% marketability discount in a shareholder oppression case. The best defense is to:
- Cite studies, transaction data, and case-specific factors that support the magnitude of the discount (Correct answer)
- Reduce the discount to avoid further scrutiny
- State the discount was applied because the client requested it
- Argue that marketability discounts are never subject to challenge
Correct answer: Cite studies, transaction data, and case-specific factors that support the magnitude of the discount
Expert opinions withstand cross-examination when they are grounded in empirical studies, comparable data, and sound reasoning tied to case-specific facts.
Question 3: In a shareholder oppression dispute, many state courts apply which standard of value when determining the fair value of a dissenting shareholder's interest?
- Fair value (as defined by state statute), which typically excludes minority and marketability discounts (Correct answer)
- Fair market value with all applicable discounts
- Investment value reflecting the controlling shareholder's synergies
- Liquidation value of the company's net assets
Correct answer: Fair value (as defined by state statute), which typically excludes minority and marketability discounts
Most state appraisal and oppression statutes define fair value as a proportionate share of enterprise value without minority or marketability discounts, protecting minority shareholders.
Question 4: When opposing experts in the same litigation reach materially different value conclusions, the most common causes include:
- Different standards of value, different discount rates, and different normalization adjustments (Correct answer)
- Different physical locations of the experts
- Different hourly billing rates charged to clients
- Different spelling of the company name in their reports
Correct answer: Different standards of value, different discount rates, and different normalization adjustments
Divergent conclusions typically stem from methodological differences in discount rates, growth assumptions, normalization adjustments, and the applicable standard of value.
Question 5: A CVA serving as a court-appointed neutral expert (Rule 706 expert) has a primary duty to:
- The court, providing an objective and independent opinion rather than advocating for either party (Correct answer)
- The plaintiff, since the plaintiff typically bears the burden of proof
- The defendant, since the defendant funds the neutral expert
- Both parties equally, acting as a mediator between competing opinions
Correct answer: The court, providing an objective and independent opinion rather than advocating for either party
A Rule 706 court-appointed expert serves the court, not either party, and must provide an independent, unbiased opinion to assist the trier of fact.
Question 6: In a divorce proceeding, the valuation date for a business interest is most often:
- Determined by state law or the court, commonly the date of separation, filing, or trial (Correct answer)
- Always the date the divorce petition is filed
- The date the valuation report is signed
- The last date the business filed a tax return before the divorce
Correct answer: Determined by state law or the court, commonly the date of separation, filing, or trial
Valuation dates in divorce vary by jurisdiction — some states use date of separation, others use filing date, and others use the trial date, making state law review critical.
Certified Valuation Analyst CVA Litigation Support and Expert Testimony 2
A CVA testifying as an expert witness must comply with Federal Rule of Civil Procedure 26(a)(2)(B), which requires disclosure of: