How to Mediate a Valuation

Mediation can be a valuable process for resolving disputes, including those related to business valuation. However, many people wonder how it's possible to mediate a valuation, given the inherent subjectivity involved in determining the worth of a company. The reality is that no two experts will evaluate the same business in exactly the same way. Business valuation involves a lot of assumptions and there is no definitive answer. So how can mediation be effective in this situation? The key is to ensure that both parties have access to all the relevant documents and information. This includes historical tax returns and financial statements, bank statements, and any other information that might be relevant to the valuation.

Once both parties have provided the necessary information, the mediator will work with them to analyze and clarify it. The goal is to ensure that everyone understands where all the bank accounts and financial statements are, and to create a shared understanding of what the business's history and future potential looks like. This can help create a range of value that both parties can agree upon, and sets the stage for a successful mediation.

After conducting their own analysis and creating a valuation, the mediator will present it to both parties. They will then defend their opinion and answer any questions or concerns that either party may have. The mediator will even involve attorneys and financial planners, if necessary, to help explain the valuation and ensure that everyone has a clear understanding of the situation.

It's worth noting that mediation can be successful even if both parties do not end up agreeing on the exact value of the business. Instead, the goal is to create a shared understanding and a range of values that can serve as a starting point for negotiations. With this information, both parties can make informed decisions and work together to reach a settlement that works for everyone involved.

Mediation can be a powerful tool for resolving disputes related to business valuation. By providing both parties with access to all the relevant documents and information, mediators can help create a shared understanding of the situation and set the stage for a successful negotiation. While business valuation will always involve some degree of subjectivity, mediation can help ensure that everyone is working from the same starting point and has a clear understanding of the situation.