A partnership or shareholder dispute needs an economist when the value of an ownership interest is at issue, when distributions or compensation are alleged to have been diverted, or when a buyout formula in the governing agreement has to be applied to normalized financial statements. The valuation date and the standard of value control the result, and the gap between fair value and fair market value can be substantial for a minority interest in a closely held company. Counsel considering an economist should start with the agreements, because they define the date, the standard, and any formula the analysis must follow.
Checklist
Gather the partnership, shareholder, or operating agreement and any buy-sell provisions
Assemble financial statements, tax returns, and general ledger detail for several years
Identify the valuation date the claim or the agreement requires and the standard of value that applies
Document owner compensation, related-party transactions, and distributions to each owner
Note any prior valuations, offers, or transactions in the company's interests
Questions to ask the economist
How do you approach a fair value standard as opposed to a fair market value standard for a minority interest?
How do you normalize owner compensation and related-party items before valuing the interest?
Which of the income, market, and asset approaches do you expect to carry the most weight for this company, and why?
How do you quantify diverted distributions or excess compensation?
Timeline
Two to three weeks to a preliminary value range from the financial statements and agreements. The full valuation follows the retention and records phases.
Required documents
Governing agreements, amendments, and any buy-sell or valuation formula provisions
Financial statements and tax returns for several years around the valuation date
General ledger detail, owner compensation records, and related-party transaction records
Prior valuations, offers, or transactions in the company's equity
Common pitfalls
Retaining an economist before the valuation date and standard of value are pinned down from the agreements and the claim
Assuming a minority discount applies when the standard of value for the claim may exclude it
Overlooking related-party transactions that change the normalized earnings materially
Why does the standard of value matter so much in a shareholder dispute?
Because fair market value assumes a hypothetical sale between willing parties and may apply minority and marketability discounts, while a fair value standard in an oppression or dissenters' setting may exclude them. For a minority interest in a closely held company the difference can be a large share of the result. The economist identifies the standard the claim requires and states how it was applied.
What drives the cost and timing of a valuation in a shareholder dispute?
The condition of the company's records, the number of years to be normalized, and whether the engagement includes a separate quantification of diverted distributions or excess compensation. A company with clean statements and few related-party items can be valued more quickly than one whose books need reconstruction. The engagement letter scopes the work in phases so counsel can see the cost of each.
Can the valuation date be changed after the analysis starts?
It can, but much of the work is date-specific: the financial statements normalized, the market data, and the rate applied all belong to the valuation date. A change after the analysis is under way means revisiting each of those, which adds time and cost. Fixing the date from the agreements and the claim before retention avoids that.
References
American Institute of Certified Public Accountants. (n.d.). Statement on Standards for Valuation Services (VS Section 100). AICPA & CIMA. Retrieved August 27, 2026. aicpa-cima.com
National Association of Certified Valuators and Analysts. (n.d.). NACVA professional standards and ethics. Retrieved August 27, 2026. nacva.com