The following article is reprinted from The M&A Tax Report, Vol. 11, No. 12, July 2003, Panel Publishers, New York, NY.

VALUATION VERISIMILITUDE

By Robert W. Wood and Dominic L. Daher

At The M&A Tax Report, we sometimes review books that we believe might be useful to our readers. Dr. Shannon Pratt's aptly titled book, The Lawyer's Business Valuation Handbook: Understanding Financial Statements, Appraisal Reports, and Expert Testimony, shines the light of day on the tactics, practices, and reports utilized by financial and valuation gurus in preparing financial statements, appraisal reports, and expert testimony. It is a refreshing change of pace from the normal "we already assume you are an expert in the area" approach taken by many other authors in the area of business valuations.

This book is very comprehensive in nature, explaining topics in an easily understood manner; it was evident from the start that this book was written by an accomplished teacher. Demystification is the key. This book runs out the clock on the age-old game of hide-the-ball that has been going on between valuation gurus and lawyers for as long as I can remember. By way of analogy, the information revealed by Dr. Pratt in The Lawyer's Business Valuation Handbook is the equivalent of David Copperfield writing a tell-all book disclosing how he performs his stable of optical illusions.

There can be no doubt that valuation issues are pervasive throughout the practice of law. How many times has a client asked for your assistance with a matter which called for valuation expertise? How many times have you sat at your desk and scratched your head when that call came? Dr. Pratt is a nationally-acclaimed expert, author, scholar, and consultant; each of these personas shine through in The Lawyer's Business Valuation Handbook. Dr. Pratt has performed over 2,000 business valuations over the course of his extensive career (31 years and counting). Dr. Pratt has proffered his expert testimony nationally in various state and federal courts of law, and he is a graduate of Indiana University (Doctor of Business Administration). Dr. Pratt also holds professional certifications as: (1) a Master Certified Business Appraiser (MCBA) of the Institute of Business Appraisers; (2) a Fellow of the American Society of Appraisers (FASA); (3) a Chartered Financial Analyst (CFA); and (4) a Certified Business Counselor (CBC). This book is organized in an approachable manner, and it is well indexed for quick access to relevant topics.

The Lawyer's Business Valuation Handbook provides invaluable advise to lawyers interested in retaining qualified valuation experts, and proven methods for assessing their credentials. This is a concise book of reference which will undoubtedly assist lawyers in interpreting and appraising expert opinions relating to business valuation matters. The Lawyer's Business Valuation Handbook is an authoritative reference which will assist the novice and expert alike in evaluating business valuations; furthermore, it will aid lawyers in assessing the caliber and completeness of proffered evidence. The Lawyer's Business Valuation Handbook contains an extensive and impressive list of citations to applicable case law covering a multitudinous number of business valuation issues.

It is evident that Dr. Pratt has a genuine understanding of valuation issues and an uncanny ability to communicate this understanding to others (especially those that may not be as well versed in the area). This is evident from his authorship of several leading treatises in the area, including: Business Valuation Body of Knowledge, Valuing of Business: An Analysis and Appraisal of Closely Held Companies, Guide to Business Valuations, and Valuing Small Business and Professional Practices. The topics discussed in The Lawyer's Business Valuation Handbook include, among others:

Even the appendixes of The Lawyer's Business Valuation Handbook proved to be useful. Appendix A provided a quick review checklist which could be used by lawyers when performing an initial review of business valuation reports (Dr. Pratt even goes so far as to grant the reader "permission to make copies of this appendix to use in connection with report reviews"). It is worthwhile noting that the checklist in question has been adopted by the American Society of Appraisers as a model in carrying out peer reviews for ASA accreditation.

Appendix B provides a very effective glossary of valuation terms. Appendix C provides the reader with a punctilious list and descriptions of the professional organizations involved in the business valuation game, such as the American Institute of Certified Public Accountants, the American Society of Appraisers, and National Association of Certified Valuation Analysts.

Overall, this book is a very practical resource, and it would make a dandy addition to any library. It can be purchased from the ABA by phone at 1-800-285-2221, by mail at ABA Service Center, PO Box 10892, Chicago, IL 60611, or online at www.abanet.org. The price of The Lawyer's Business Valuation Handbook: Understanding Financial Statements, Appraisal Reports, and Expert Testimony is $124.95, but it is available to ABA Family Law and General Practice, Solo and Small Firm section members for $114.95.

Valuation Verisimilitude, Robert W. Wood and Dominic L. Daher, Vol. 11, No. 12, The M&A Tax Report (July 2003), p. 5.