mission
Almost everyone available to tell you what an interest is worth is selling an appraisal, and the question that fixes the number first is a question of law.
In a disputed matter the appraiser is rarely the one who picks the definition of value. It is fixed before the analysis starts — by the governing statute or regulation, by the cause of action pleaded, by the controlling agreement, and by the law of the forum — and what that term means is a question of law. As the Colorado Supreme Court put it in Pueblo Bancorporation v. Lindoe, Inc., 63 P.3d 353 (Colo. 2003), ‘the meaning of “fair value” is a question of law, not an issue of fact to be opined on by appraisers.’ What follows from that definition is treated very differently: the method, the inputs and the resulting number are the trial court’s to find, and an appraisal award is reviewed for abuse of discretion with significant deference to those findings (Fir Tree Value Master Fund v. Jarden Corp., Del. Supr., July 9, 2020). Two levers, two standards of review — and the first one is not the expert’s to pull. The profession concedes it in its own rules: USPAP’s JURISDICTIONAL EXCEPTION RULE provides that where a law or regulation precludes compliance with part of USPAP, that part becomes void for the assignment, and adds that ‘Instructions from a client or attorney do not establish a jurisdictional exception.’ Law displaces the professional standard. Counsel does not. What a party actually meets at that moment, though, is a market that sells appraisals, and an appraisal engaged before the framework is settled is an expensive way to answer the wrong question.
The Business Valuation Institute exists to supply the missing read, and to make the first hour of it free. Anyone can use the Institute’s concierge at no charge: it asks what kind of proceeding this is, what has already been filed and in which state, says plainly which parts of the framework the proceeding has already fixed and which are still open to argument, and identifies what kind of expertise the matter actually needs.
The reference material covers three areas, in the order the law reaches them. What the governing law fixes before any financial work begins — the standard of value, the effective date, the premise and the level of value, each of which the profession’s own mandatory standards require to be stated and defined separately. The three proceedings in which a co-owner’s interest is bought out or divided by operation of law rather than sold: appraisal and dissenters’ rights in closely held companies, oppression buyouts, and marital dissolution. And valuation for estate, gift and transfer tax, where the instruction runs in the opposite direction — an appraisal statute can forbid discounting the very block that, given away rather than bought out, the Service declines to aggregate with the family’s other holdings at all. Same shares, same family, opposite instruction.
What the Institute does not do is take a position in the number. It performs no valuations for use in any matter, brokers and advises on no transactions, takes no share of any award or settlement, and does not recommend, rank or refer appraisers or credentials. That is not modesty about scope; it is the condition that makes the analysis worth anything.
The last of those four is the one that needs explaining, because this field is marketed on letters after a name harder than most. Business valuation is largely unlicensed: there is no federal licensing requirement for appraisers of business property the way there is for real estate appraisers on federally related transactions, though some states require certification, and USPAP binds an appraiser only where law, regulation or an agreement with the client obliges compliance, or where the individual represents that the work is being done as an appraiser. A credential is therefore not permission to practice. It is the only enforceable obligation the expert has accepted, and the obligations differ materially between them. Naming which questions to ask about that is useful and this site does it. Naming a person is a referral, and the Institute does not make one here.
It will also not tell you what an interest is worth, what standard governs your matter, whether to file, or what an opposing expert’s number should have been. It publishes no multiple, discount rate, capitalisation rate or discount percentage as typical or reasonable, and no table of the discounts courts have allowed. A discount a court accepted is a litigation outcome on that record, not a valuation datum — which is the practice the IRS’s own Discount for Lack of Marketability Job Aid criticises, and that document says on its face that it is not an official IRS position and may not be cited as authority.
