LEGISLATION: Choosing The Right Valuation Expert

For more than 20 years, Edward G. worked long hours developing his waste handling business. He was so successful, in fact, that a large re-gional waste firm repeatedly tried to buy his company - raising the ante with each successive offer. After these buy-out efforts failed, the firm tried another approach: luring away Ed-ward's customers with unrealistically low prices.

As his customer list dwindled, Edward grew increasingly scared - and angry. He turned to his lawyers who decided that Edward's company had a good chance of successfully suing the regional firm for predatory pricing under federal and state anti-trust laws. As part of the case preparation, the lawyers needed to assess the value of Edward's company - part of the damages potentially recoverable from the defendant for illegally driving the company out of business.

The lawyers soon discovered that today's business litigation climate has spawned a proliferation of business valuation specialists willing to serve as expert witnesses. Litigators thus face a difficult task: choosing the ap-propriate expert from among the many who seem to have the right credentials. So-called "experts" in business valuation include economists, accountants, business brokers and appraisers.

The process usually begins with a telephone interview and requests for a resume and a rate quote. The candidate's resume will highlight his or her education, job history, publications and honors. Credentials, however, don't tell the full story. That's why lawyers who interview candidate ex-perts must ask important questions that go beyond technical qualifications. The selection process should fully explore the would-be expert's talent and experience, including deposition and trial testimony skills and potential problem areas in the expert's past.

Sheer numbers of appraisals or court appearances are not as important as an expert's background in valuing the particular business or in performing an appraisal for purposes similar to the matter under litigation. How an expert values a business for estate planning purposes usually is different from how the expert would appraise a business for a divorce settlement or for a buy-sell agreement between business partners.

No generally accepted licensing requirements exist within the field of business valuation. To fill the gap, several professional organizations confer their own credentials upon their respective qualifying members: National Association of Certified Valuation Analysts (Certified Valuation Analyst); American Society of Appraisers (Accredited Senior Appraiser); Institute of Business Apraisers (Certified Business Appraiser); and, soon, the American Institute of Certified Public Accountants (Accredited Business Valuator).

A qualified expert must be engaged early so that he or she is available throughout pre-trial preparation, which typically consumes 95 percent of the litigation timeline. Candidate experts should be asked to describe how they expect to participate in the discovery process (oral depositions, written interrogatories, etc.). Valuation experts must be able to reach beyond mere financial records, examining offers to purchase, prior transfers of company stock or assets, and changes in management.

Lawyers often do not fully anticipate all of the documents and materials the expert will need to examine and the questions the expert must answer. Experienced candidates will want to be involved in identifying documents to be produced, preparing interrogatories and developing questions for expert witnesses on the other side.

Opposing counsel may, throughout the expert's deposition, learn facts or circumstances that would encourage a settlement. The best expert witnesses are skillful in coaxing cross-examination that discloses opposing counsel's strategy.

The cross-examination of one's expert by opposing counsel often draws attention to matters that the other side thinks are important. Armed with this information, an expert can more easily close any gaps in his or her testimony.

A skillful expert uses an opposing expert's deposition and reports to find "holes" in the other expert's analysis, focusing on unfounded assumptions and demonstrating that the opposition, if it used proper assumptions and facts, would actually support his or her own conclusions.

Finally, a candidate expert's background must be probed carefully to uncover problems such as a past failure to qualify as an expert witness in court, testimony thrown out by a court, or publications or prior testimony that contradict the expert's opinion.

Highly-qualified and seasoned experts often serve as speakers or panelists at meetings and conferences. If an expert has openly taken a viewpoint or position that appears to conflict with likely testimony in court, the expert and the lawyer should carefully plan how to respond when the apparent conflict surfaces.

Business valuation is an art, not a science. The work is an evolving process. Keeping abreast of changes in the law and of updates in research means that, from time to time, an intellectually honest business analyst must modify his or her approach and opinions. A competent business valuation expert should be able to comfortably explain how the evolution in such analysis actually enhances the reliability of his or her opinion.

Acquisitions Eastern Environmental Services has acquired the rights to operate a transfer station and processing facility known as "Sanitary District No. 1" in New York for 13 years. The company will receive 1.7 million annually to process approximately 100 tons of waste per day.

Republic Industries Inc., Fort Lau-derdale, Fla., has acquired three solid waste companies - National Serv-All, Fort Wayne, Ind.; AAA Disposal of Nashville, Tenn.; and Elliott's Agri-Service Inc., Pineland, Texas - for an aggregate purchase price of approximately $60 million, payable in Republic common stock. The three companies' combined revenue in 1996 was approximately $38 million. The acquisitions will be accounted for as 'pooling of interests transactions.'

Roy F. Weston Inc., West Chester, Pa., announced that it has sold the assets of its wholly-owned subsidiary Weston Interactive Inc. to AIG Consultants Inc., New York, a subsidiary of American International Group Inc., for $1.35 million. Weston Interactive develops and markets interactive mutimedia courseware addressing workplace safety and environmental issues.

Agreement Leach Co., Oshkosh, Wis., and Wagon Engineering, Kuala Lumpur, Malaysia, signed a license and technical assistance agreement under which Wagon will produce and market the Leach 2RII rear loading refuse collection body at Wagon's new Kuala Lumpur manufacturing facility.

Contracts Earth Tech, Long Beach, Calif., recently was awarded a $49 million, five-year contract, with the U.S. Environmental Protection Agency, Region IV, to provide Emergency and Rapid Response Services for removal of hazardous substances at Superfund sites in Florida, Georgia, South Carolina, North Carolina, Tennessee, Kentucky, Alabama and Mississippi.

Browning-Ferris Industries (BFI), Houston, has signed a five-year contract under which International Billing Services, El Dorado Hills, Calif., will process all BFI customer statements for North America.

Shred-Tech, Cambridge, Ontario, Canada, has been awarded a $3- million contract by Micro Metallics Corp., San Jose, Calif., to supply and install a custom-designed system to reduce computer and computer hardware for the recovery of component metals.

The city of Riverview, Mich., has awarded a multi-year contact to EMCON, San Mateo, Calif., to provide engineering services to the Riverview Land Preserve, a 285-acre solid waste disposal facility. Services include: routine landfill site support, evaluation of the landfill's airspace use, leachate and landfill gas management projects and development of a master plan for the landfill.

Fiscal Browning-Ferris Industries Inc., Houston, reported consolidated net income, before an extraordinary charge, for the quarter ending March 31 of $70,955,000, or 35 cents per share, on consolidated revenues of $1.414 billion.

Eastern Environmental Services Inc., Mt. Laurel, N.J., reported revenue for the quarter ending March 31 of $19.5 million and operating income of $2.6 million, excluding merger costs of $1.5 million, compared to $9.6 million in revenue and $16,000 in operating income for the same period in fiscal 1996.

Republic Industries Inc., Fort Lauderdale, Fla., reported that for the three months ending March 31, net income increased 133 percent to $28.9 million, or 8 cents per share, from $12.4 million, or 4 cents per share in 1996 for the same period.

USA Waste, Houston, reported financial results for the first quarter ending March 31. Net income increased 78 percent to $49.1 million, while earnings per share rose 52 percent compared to the 1996 period. Also, operating profits increased 64 percent to $88.8 million from $54.2 million.

New Division National Seal Co., Aurora, Ill., has announced the creation of its Piping and Gas Collection Systems Division. This new division offers complete systems for landfill gas recover and other HDPE pipe installations and will be headquartered in Baton Rouge, La.

Paperboard Alliance The 100% Recycled Paperboard Alliance joined with eight major packaged goods companies to participate in a high-visibility marketing campaign featuring products packaged in 100 percent recycled paperboard. The companies include: General Mills, Lever Brother Co., The Dial Corp., Martin's Potato Chips, New Mexico's Kitchen, Oceana Foods, Comet American Marketing and General Building Corp.

Patent SwapLoader, Des Moines, Iowa, a manufacturer of hook-lift hoists, has been awarded a U.S. patent for the dual-capacity of its Model SL-2418HD, a model designed for medium-duty trucks with 96" cab-to-axle.

Purchase Reko B.V. has purchased an MSS VYDAR Automated Plastic Flake Removal System for installation in its PET recycling facility in Geleen, Holland, from MSS International Inc., Nashville, Tenn.

Acquisition Roy F. Weston Inc., West Chester, Pa., has sold the assets of its wholly-owned subsidiary Weston Inter-active Inc. to AIG Consultants Inc., New York, a subsidiary of American International Group Inc., for $1.35 million. Weston Interactive develops and markets interactive mutimedia courseware addressing workplace safety and environmental issues.

Agreement Leach Co., Oshkosh, Wis., and Wagon Engineering, Kuala Lumpur, Malaysia, signed a license and technical assistance agreement under which Wagon will produce and market the Leach 2RII rear loading refuse collection body at Wagon's new Kuala Lumpur manufacturing facility.

Contracts Earth Tech, Long Beach, Calif., recently was awarded a $49 million, five-year contract, with the U.S. Environmental Protection Agency, Region IV, to provide Emergency and Rapid Response Services for removal of hazardous substances at Superfund sites in Florida, Georgia, South Carolina, North Carolina, Tennessee, Kentucky, Alabama and Mississippi.

Browning-Ferris Industries (BFI), Houston, has signed a five-year contract under which International Billing Services, El Dorado Hills, Calif., will process all BFI customer statements for North America.

Shred-Tech, Cambridge, Ontario, Canada, has been awarded a $3- million contract by Micro Metallics Corp., San Jose, Calif., to supply and install a custom-designed system to reduce computer and computer hardware for the recovery of component metals.

The city of Riverview, Mich., has awarded a multi-year contact to EMCON, San Mateo, Calif., to provide engineering services to the Riverview Land Preserve, a 285-acre solid waste disposal facility. Services include: routine landfill site support, evaluation of the landfill's airspace use, leachate and landfill gas management projects and development of a master plan for the landfill.

Fiscal Browning-Ferris Industries Inc., Houston, reported consolidated net income, before an extraordinary charge, for the quarter ending March 31 of $70,955,000, or 35 cents per share, on consolidated revenues of $1.414 billion.

Eastern Environmental Services Inc., Mt. Laurel, N.J., reported revenue for the quarter ending March 31 of $19.5 million and operating income of $2.6 million, excluding merger costs of $1.5 million, compared to $9.6 million in revenue and $16,000 in operating income for the same period in fiscal 1996.

Republic Industries Inc., Fort Lauderdale, Fla., reported that for the three months ending March 31, net income increased 133 percent to $28.9 million, or 8 cents per share, from $12.4 million, or 4 cents per share in 1996 for the same period.

USA Waste, Houston, reported financial results for the first quarter ending March 31. Net income increased 78 percent to $49.1 million, while earnings per share rose 52 percent compared to the 1996 period. Also, operating profits increased 64 percent to $88.8 million from $54.2 million.

New Division National Seal Co., Aurora, Ill., has announced the creation of its Piping and Gas Collection Systems Division. This new division offers complete systems for landfill gas recover and other HDPE pipe installations and will be headquartered in Baton Rouge, La.

Paperboard Alliance The 100% Recycled Paperboard Alliance joined with eight major packaged goods companies to participate in a high-visibility marketing campaign featuring products packaged in 100 percent recycled paperboard. The companies include: General Mills, Lever Brother Co., The Dial Corp., Martin's Potato Chips, New Mexico's Kitchen, Oceana Foods, Comet American Marketing and General Building Corp.

Patent SwapLoader, Des Moines, Iowa, a manufacturer of hook-lift hoists, has been awarded a U.S. patent for the dual-capacity of its Model SL-2418HD, a model designed for medium-duty trucks with 96" cab-to-axle.

Purchase Reko B.V. has purchased an MSS VYDAR Automated Plastic Flake Removal System for installation in its PET recycling facility in Geleen, Holland, from MSS International Inc., Nashville, Tenn.

Contracts Earth Tech, Long Beach, Calif., was awarded a $49 million, five-year contract, with EPA Region IV to provide emergency and rapid response services for removal of hazardous substances at Superfund sites in Florida, Georgia, South Carolina, North Carolina, Tennessee, Ken-tucky, Alabama and Mississippi.

Browning-Ferris Industries (BFI), Houston, has signed a five-year contract under which International Billing Services, El Dorado Hills, Calif., will process all BFI customer statements for North America.

Shred-Tech, Cambridge, Ontario, Canada, has been awarded a $3- million contract by Micro Metallics Corp., San Jose, Calif., to supply and install a custom-designed system to reduce computer and computer hardware for the recovery of component metals.

The city of Riverview, Mich., has awarded a multi-year contact to EMCON, San Mateo, Calif., to provide engineering services to the Riverview Land Preserve, a 285-acre solid waste disposal facility. Services include: routine landfill site support, evaluation of the landfill's airspace use, leachate and landfill gas management projects and development of a master plan for the landfill.

Fiscal Browning-Ferris Industries Inc., Houston, reported consolidated net income, before an extraordinary charge, for the quarter ending March 31 of $70,955,000, or 35 cents per share, on consolidated revenues of $1.414 billion.

Eastern Environmental Services Inc., Mt. Laurel, N.J., reported revenue for the quarter ending March 31 of $19.5 million and operating income of $2.6 million, excluding merger costs of $1.5 million, compared to $9.6 million in revenue and $16,000 in operating income for the same period in fiscal 1996.

Republic Industries Inc., Fort Lauderdale, Fla., reported that for the three months ending March 31, net income increased 133 percent to $28.9 million, or 8 cents per share, from $12.4 million, or 4 cents per share in 1996 for the same period.

USA Waste, Houston, reported financial results for the first quarter ending March 31. Net income increased 78 percent to $49.1 million, while earnings per share rose 52 percent compared to the 1996 period. Also, operating profits increased 64 percent to $88.8 million from $54.2 million.

New Division National Seal Co., Aurora, Ill., has announced the creation of its Piping and Gas Collection Systems Division. This new division offers complete systems for landfill gas recover and other HDPE pipe installations and will be headquartered in Baton Rouge, La.

Paperboard Alliance The 100% Recycled Paperboard Alliance joined with eight major packaged goods companies to participate in a high-visibility marketing campaign featuring products packaged in 100 percent recycled paperboard. The companies include: General Mills, Lever Brother Co., The Dial Corp., Martin's Potato Chips, New Mexico's Kitchen, Oceana Foods, Comet American Marketing and General Building Corp.

Patent SwapLoader, Des Moines, Iowa, a manufacturer of hook-lift hoists, has been awarded a U.S. patent for the dual-capacity of its Model SL-2418HD, a model designed for medium-duty trucks with 96" cab-to-axle.

Purchase Reko B.V. has purchased an MSS VYDAR Automated Plastic Flake Removal System for installation in its PET recycling facility in Geleen, Holland, from MSS International Inc., Nashville, Tenn.