A checklist to maximize value and minimize disputes

A business valuator (or expert in damages quantification) may be retained by more than one party and possibly by parties with opposing interests. In certain situations, for example, matrimonial disputes involving a business or the buy-out of a minority shareholder, professional fees may be reduced through the joint retention of one expert, provided a process is in place to ensure the expert considers the views and comments of the parties in a fair, objective and transparent manner.

The purpose of this article is to address common issues with joint retainers by suggesting a practical approach that minimizes potential areas for dispute. A checklist for future reference is included.

Terms of the Engagement

The purpose and scope of the engagement and the role of the expert should be clearly defined at the outset. If there is a significant change with respect to the purpose or scope of work as the engagement proceeds, such change should be documented in writing and approved by the parties.

At the outset of the engagement it is essential that the parties involved (and their legal counsel) understand that:

  1. No information received from one party should be treated as being confidential so far as any of the other parties are concerned; and
  2. If a conflict develops between the parties that cannot be resolved, the expert cannot continue to work for all parties and may have to withdraw from the engagement entirely.

The engagement letter should also address the key terms of the expert's engagement, including the process to be followed with respect to communications received from all parties, issuance of draft reports and the final report, as well as the arrangements for payment of the expert's fees. Best practices to address these issues are discussed in further detail below.

Communications with the Expert

In order to minimize the potential for subsequent disputes or the appearance of bias on the part of the expert, it is advisable that all communications received by the expert from one party be distributed to all other parties.

In certain situations, it may be possible to arrange an initial meeting between the expert and all parties to review the engagement terms and provide general background information. In other instances, the expert may be required to meet with the parties on an individual basis. If individual meetings are to be conducted, it is advisable for the expert to distribute to all parties an agenda or list of questions that will be discussed in advance of such meetings.

Draft Reports

Draft reports should be submitted concurrently to all parties. In the case of a business valuation report, submitting a Blind Draft report may be appropriate. A Blind Draft report sets out the valuation approach adopted and all of the factors that were considered by the valuator, but excludes the valuation conclusions. This approach focuses all parties on the valuation methodology, factual data, analysis and key assumptions adopted by the valuator rather than the quantum of the valuation conclusion.

In order to maintain an efficient timeline, a "Draft Comment Period" should be defined. For example, all parties should be given a specified number of business days in which to review and submit their written comments regarding the expert's draft report. A copy of each party's written comments should be forwarded to all other parties for review and comment.

Responses to Other Parties Comments

Subsequent to the Draft Comment Period, each party should be afforded the opportunity to provide written submissions addressing the comments of the other parties. Again, a specified number of business days should be set out for the receipt of such submissions and a copy should be provided to all other parties.

Given the time involved in receiving and reviewing submissions, it is preferable to limit the number of draft reports that are issued. The parties may not agree on all facts and/or issues. However, it is the role of the expert to assess the information provided and the comments received and form an opinion.

Representation Letters

Prior to the issuance of the final report, each party may be asked to confirm that they have reviewed the draft report(s) in detail and other than the information provided in their written submissions, they have no knowledge of any facts that have not been disclosed in the draft report(s) which they believe could materially affect the valuation or damages conclusions. Requiring this type of written confirmation may help eliminate opportunities for additional issues to be raised subsequent to the issuance of the final report.

Final report

The expert will review all of the comments and submissions received from the parties and will reflect the changes that he deems necessary in the final report. It should be made clear to all parties at the outset of the engagement that they may not fully agree with the expert's conclusions. However, given the opportunities to provide written submissions in relation to the methodology, analysis and assumptions set out in the draft report(s), there will be no further opportunity to comment on the final report.


Joint retainers can be a more efficient and less costly, but only if the process to be followed is clearly established at the outset of the engagement and allows for input from all parties.

Joint Retainer Checklist

The following checklist is designed as a reference tool when preparing and/or reviewing a joint retention agreement.

  • Has the purpose and scope of the valuation engagement been clearly defined?
  • Have the parties agreed upon the valuation date and the value metric (i.e. fair market value or fair value)?
  • Has the process for communicating with the expert been addressed? For example, are all communications received by the expert from one party to be distributed to all other parties?
  • Is a Blind Draft report to be issued by the expert to the parties for review and comments?
  • Has a Draft Comment Period been defined? If so, is the number of days specified for this phase of the engagement reasonable?
  • Will each party be afforded the opportunity to provide written submissions addressing the comments of the other parties? If so, is the number of days specified reasonable?
  • Once all submissions are due, what is that timeline for the issuance of the Final report?
  • Have the arrangements for payment of the expert's fees been clearly documented?

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.