Using Valuation Software in Court Featuring William F. Murphy, CPA/PFS, ABV, CFF, CGMA, CVA

By April 12, 2021June 16th, 2021Bill Murphy

Bring your laptop and Valuation Software to Court? Yes!

William Murphy has had a long career in business valuation litigation and has found that bringing his laptop and ValuSource Valuation software to court with him has helped him to convince judges and win more cases.  Bill also does business valuation mediation between opposing experts, using the software with great success in getting the opposing sides to come together and agree on a final value.

Why ValuSource Valuation Software?

Bill Murphy was an early adopter of ValuSource software, having begun using ValuSource products in the early 1990s after an attorney asked him to do a business valuation. After starting to use ValuSource software, Murphy quickly realized it was just the tool he needed to make a success of his new venture. He attended one of NACVA’s first certification programs, at a time when NACVA was the only certified valuation analyst (CVA) certification available.

Software for Court and Mediation

In litigation cases, Bill finds the valuation software simply invaluable. From being able to quickly produce valuation reports (days and weeks sooner than his opponents) to bringing his laptop and valuation software to court. By having the valuation software in court in real time it allows Bill to justify his values when challenged by opposing council. The use of a video monitor attached to the software display allows Bill to be able to explain his underlying assumptions and results to the court. The ability to quickly prepare various valuation models and scenarios to defend his valuation estimate is extremely beneficial. Â Bill says this stops cross examination in its tracks and really helps counter opposing expert’s opinion.

To make Bill more efficient, h learned he could have his staff to input much of financial data we received in discovery into the system. Then I would use this data to efficiently start the process to perform the valuation procedures using my professional judgment and accepted valuation theory. The software allowed me to make critical valuation judgements quickly and do the technical work needed to deliver a professional estimate of value.

Bill’s attorney clients love the fast turnaround.

Battling Bill in Court with Spreadsheets

Since many valuators still rely on spreadsheets, going up against Bill and his software can be a big problem. Typically, opposing expert witnesses do not have their laptop in front of them in court and need a week or more to come back with answers to questions from opposing counsel or the judge. This not only wastes the court’s time, but it also jeopardizes credibility. Very often, Bill is asked to review the opposing expert’s valuation report and by using the software, he can input, review, and present his critique to the court very quickly.

“Many times I would be given opposing expert’s report on the courthouse steps on the day of trial and be asked to analyze it for testimony that afternoon. Using the ValuSource software, I was able to examine the underlying assumptions of the other report, and critique it for the court. This allowed me to point out to our judge any erroneous assumptions and pitfalls contained in the other report,” says Bill. If the other report was using an unreasonable capitalization rate or had not correctly tax effected the benefit stream or was using an unrealistic growth assumption, I would then be able to quickly inform the court. This rebuttal testimony for court using a monitor and a laser pointer to show our reports side-by-side can be a very effective tool for defending your opinion.

During this teaching process, Bill can use the software to run different scenarios. “For example, the judge or opposing council could ask what would happen if the discount rate was changed to X, rather than Y and I’d say, let me show you,” says Bill. “In a matter of minutes, I could update and change all the calculations in the witness box using the ValuSource software. And of course, many times this changed their valuation number significantly, taking the case in the wrong direction because it shows they were stretching the truth, so it is more favorable for their client. This is not only embarrassing, but it could cost them their case.”

Using the Software’s Sanity Check

Bill also relies on the software’s Sanity Check feature in litigation support cases to assure that his and the opposing expert’s value makes sense in the ‘real world’. If an opposing expert’s value is theoretically correct but does not stand up as a realistic transaction test, the software can quickly uncover this error and give Bill a significant advantage in court. If this is the case, Bill says he tells the judge “No bank would believe their valuation calculation and loan money based on it as the value assigned cannot cash flow the business. And if they did, the future owner would have to take a significant unrealistic pay cut to make it work.” He continues, “Understanding the full financial picture based on an unbiased valuation using real world scenarios is the gold standard.

High Efficiency Business Valuation

Since ValuSource software follows a step-by-step approach based on Industry accepted valuation standards and industry best practices, Bill can focus on leveraging his expertise while leaving much of the laborious calculation process to the software, saving him a significant amount of time.

The capabilities of ValuSource software combined with Bill’s experience and expertise make him a formidable opponent. Bill has become a highly respected expert witness and mediator with a reputation for precision and transparency. “ValuSource software has made me more money than any other software product,” says Bill Murphy. Investing in rock-solid software complimented by a generous selection of data resources and a report writer is well worth the investment.

About William Murphy

Bill Murphy’s expertise in mediation and business valuation makes him a sought-after expert in business valuation in matters involving divorce, shareholder disputes and acquisitions. He is presently semi-retired as a Financial Consultant with the law firm of Mallor Grodner LLP.

Before joining Mallor Grodner LLP as a financial consultant, William Murphy was Consulting Principal for 25 years at the CPA firm he founded, Murphy, McClary, Stover & Burnett, LLC.

Bill pays it forward by doing pro bono work for Indianapolis chapter of SCORE, the nation’s largest network of expert business mentors, helping entrepreneurs grow and manage their businesses. He also volunteers with the Salvation Army Planned Giving Division to assist with valuation and estate planning issues.

Benefits

  • Computes business value much faster
  • Follows industry best practices
  • Makes valuators more responsive – change numbers and assumptions with the click of your mouse to compare scenarios
  • Saves court time
  • Follows a logical process, eliminating the chance of errors
  • Unbeatable accuracy and reliability
  • When combined with a robust data subscription, valuators can rest assured they are using the ‘Rolls Royce’ of business valuation products
  • Generates a detailed report with an Executive Summary of value to save time in a court scenario
  • Should assumptions need to change, calculations can easily be reviewed, and a supplementary report generated

ValuSource Software Solution

  • ValuSource Pro

ValuSource Data Solutions

  • BVDataWorld Titanium Level (21 Data Sources) including:
    • ValuSource M&A Comps
    • Guideline Public Company
    • Mergerstat Review Prices to Earnings Ratios
    • RMA
    • Duff & Phelps Cost of Capital Navigator