How to Reduce Your Liability Risk in Business Valuations

Business valuation (BV) liability claims are not as frequent compared to other litigation risks faced by practitioners. On the other hand, there are BV-related liability claims that exist, especially in cases where a valuation report was used to guide financial decisions by businesses, lending services, regulatory agencies, and others, according to Frank Vinluan, in the January 21 issue of FVS News.

One of the best ways valuators can reduce their risk of a lawsuit starts with the engagement letter. Engagement letters can help limit a valuator’s exposure by clearly establishing the expectations of work to be performed, the purpose of the valuation, and the standard of value to be used.

Engagement letters can also establish a framework for dispute resolution—if a problem arises.  For instance, an engagement letter can indicate that in the event of a dispute, the parties must attempt to resolve the issue through mediation or arbitration.

To learn more tips for reducing professional liability risk, click here.

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