David Larsen Shares Views on Conflicting Valuations

David Larsen, Managing Director in Duff & Phelps Alternative Asset Advisory practice, was recently quoted in the third part of a three-part Private Equity Law Report article titled, “Independent Valuation Firms: Tips for Overseeing the Process and Resolving Disputes Over Conflicting Valuations.” 

Use of independent valuation firms by PE funds for transactions or financial reporting is rising, but liability for third-party valuations remains with the sponsor. It behooves the sponsor, then, to not only select the independent valuation firm with care, but to oversee its efforts to reach a value range suitable for both parties. Some fund managers wait, however, until the last stage of the valuation process (i.e., when the manager has the valuation firm’s final numbers in hand) to exert oversight. If opinions differ, a robust discussion about process and inputs may yield the most efficient result. If the parties cannot reach an agreement, the fund manager may need to look to the engagement letter, as well as its fund documents, for obligations and requirements about both resolving and disclosing the conflict. This article explores the typical process of working with a valuation firm, including how managers can oversee and resolve disagreements over valuations.

Read the full story here.