Settlement Valuation or Court Expert Valuation: Which Does Your Matter Need?

Most people who need a business valued after separation need one of two things. Either they need a clear, independent figure to negotiate or mediate with, or they need an expert report that can be relied on in court. The two are prepared differently, cost different amounts and serve different purposes. Choosing between them is the first decision in most matters, and it is worth getting right.

Two reports, two jobs

A valuation for negotiation and a valuation for court answer the same underlying question: what is the business, or the interest in it, worth. What differs is who the report is written for, the conditions under which it is prepared and what it can be used for. Neither is a lesser version of the other. One is a tool for reaching agreement; the other is evidence.

The Settlement Valuation

The Settlement Valuation is a fixed-fee independent valuation, at $2,995 + GST, prepared for private negotiations, mediation, property-settlement discussions, establishing the value of a business within the asset pool, solicitor and accountant review, and assessing whether a more extensive expert report is required.

It generally includes a review of the business and ownership structure, analysis of the financial statements and management accounts, normalisation of earnings, consideration of owner remuneration and private expenses, selection and explanation of the methodology, consideration of the business-specific risks and the sources of goodwill, calculation of enterprise and equity value, valuation of the relevant ownership interest, a written independent report and a draft for factual review before finalisation. It is generally completed within seven business days after payment and receipt of all required information, subject to complexity.

It is prepared for negotiation and mediation purposes. It is not prepared for filing or reliance as expert evidence in court. That is not a limitation hidden in the fine print; it is the definition of the product. It is not prepared under formal or joint instructions, it does not address the expert-evidence requirements that apply in court proceedings and it is not signed as an expert report.

The Court Expert Valuation

The Court Expert Valuation, from $8,995 + GST, is for matters where the valuation is intended for filing or reliance in court. It is prepared through an valuer whose overriding duty is to the Court, and the signing valuer will be a Chartered Accountant. The expert does not act as an advocate for either party.

Engagement is subject to an initial conflict and suitability assessment, review of the proposed instructions and acceptance by the appointed expert. The report may include review of formal or joint instructions, detailed financial and valuation analysis, consideration of competing factual assumptions, supporting schedules, a declaration of independence, the expert opinion and reasonable written clarification following delivery. It is prepared to address the applicable expert-evidence requirements in the specific engagement.

The fee is expressed as "from" because the work varies with the matter. The final scope and fee depend on the business, the entity structure, the quality of the records and the issues in dispute, and are confirmed in writing before work begins. Court attendance, cross-examination, expert conferences, supplementary reports, forensic accounting and material additional document review are separately charged.

How to tell which you need

Four questions settle most cases.

Is the matter before the Court?

If proceedings have started, the value of the business may need to be established by expert evidence, and the Settlement Valuation is not the right tool. Your lawyer will advise on what the Court requires.

Has a single expert been agreed or ordered?

If the parties have agreed, or the Court has ordered, that one expert will value the business for both sides, that is an expert engagement on joint instructions. The Court Expert Valuation applies.

Are you negotiating or mediating?

If proceedings have not started and the parties are trying to reach agreement, directly, through solicitors or at mediation, the Settlement Valuation is prepared for exactly that use. Many matters settle on it.

What does your lawyer say?

Whether a report will be needed as evidence, and in what form, is a legal question. A valuer can describe what each report is prepared for. Your lawyer can tell you which your matter requires. If you do not yet have a lawyer, the enquiry form lets you choose "Not sure" and we will explain what each service is for before anything begins.

Moving from one to the other

A matter that starts in negotiation can end in court. The pathway is this: if your matter later requires an expert report for court, we will assess whether the initial work can be carried forward and provide a separate quotation before proceeding. The appointed expert must independently review the material and may require further information or analysis.

Two things follow. The Settlement Valuation fee is not automatically credited against the expert fee. Unnecessary duplication is avoided where appropriate, but the expert must control and verify their own opinion, and that cannot be promised against a discount. And where an expert report was always going to be required, starting there is usually the better path. We will say so at the scope stage rather than let you begin with the wrong tool.

The cost of choosing wrongly

Choosing the Settlement Valuation when the matter needed expert evidence means holding a report that cannot be relied on for the purpose you now need, and starting again. Choosing the Court Expert Valuation when a negotiation would have settled on a Settlement Valuation means paying more, waiting longer and working through instructions that were not needed. Neither outcome is a disaster, but both are avoidable with a short conversation about where the matter stands.

What both reports have in common

Whichever applies, the valuation is reached the same way: independently, from the evidence, with every adjustment and assumption explained. Our role is to determine a supportable value, not to produce the highest or lowest number for either party. The report is written so the other side can follow the reasoning, because a figure that cannot be explained cannot be relied on by anyone.

Where to from here

If you are negotiating or mediating, start a Settlement Valuation. If the matter is before the Court or an expert report is expected, request an Expert Valuation. If you are not sure, tell us about the matter and we will confirm the appropriate scope before anything begins. The fees page sets out what each service includes.

This is general information about the two services and how they differ. It is not legal, taxation or financial advice. The appropriate valuation scope depends on the circumstances of the matter and any applicable instructions or court orders.