An effective cross-examination requires an attorney to become educated as to the basis for the expert's opinion of value and to understand how the expert reaches certain conclusions in the report. The lawyer's own expert should detail which parts of the opposition's report are subject to attack. Well before trial, attorney and expert should sit down together to script cross-examination questions for the opposing expert.
Family Advocate: Outstanding Financial Experts (Buy Issue)Often the most valuable asset in a marital estate is an ownership interest in a business or professional practice. Generally, each side will retain an expert to value the business. In a perfect world, the difference between the experts' values would be manageable, but this is not always the case. Instead, the disparity makes reaching an amicable resolution difficult. The valuation of the business interest becomes a critical component of the equitable distribution trial. Winning the case may hinge on an effective cross-examination that will undermine the value stated by the opposing expert and validate your own expert's conclusions.

Following are examples of tactical mistakes made in cross-examining a business valuation expert.

  • After failing to review and understand questions scripted by the expert, the attorney asks him or her to sit at counsel table and "feed" follow-up questions during the opposing expert's testimony. This leads to ineffective results. Instead of focusing on the opposing expert's responses, the lawyer becomes distracted by his own expert's suggested questions. This allows the testifying expert to control the testimony and minimizes the lawyer's ability to undermine the opposing expert's report. Additionally, the trier of fact finds the presentation disjointed and ineffective. Thus, while it is important to involve your expert in cross-examination, it is a mistake to become completely dependent on the expert at trial.

  • A second mistake is not attacking the opposing expert's report on cross-examination. Sometimes a lawyer will ask his or her expert to critique the opposition's report on direct examination. In this scenario, the opposing expert testifies, and cross-examination is limited. The expert leaves the stand without his report having been criticized. This can leave the court with the impression that the opposing expert's conclusions are credible and thus the opposition's case appears stronger than it really is.

To be effective on cross-examination, it is imperative that the lawyer be thoroughly educated as to the opposing expert's valuation theory, techniques, findings, and rationale for ultimate opinion of value.

Voir dire questions

Two areas of cross-examination that occur during trial are the voir dire of the expert and questioning relating to the report. Cases are rarely won or lost during voir dire. When preparing for trial, decide what you want to accomplish during voir dire. If the opposing expert has strong credentials, do not address them in voir dire if your questions will serve only to reinforce them.

You may wish to proceed with voir dire if your expert possesses stronger credentials. Use voir dire to stress your expert's positive attributes, identify the differences between the two experts' credentials, and ask the other expert questions to highlight weaknesses in his or her credentials.

The experts may differ in:

  • Professional organizations: Does your expert have superior professional designations or credentials?

  • Educational background: Has your expert obtained an advanced business degree, such as an MBA, or taken advanced business valuation courses that provide greater expertise?

  • Industry expertise: Does your expert possess greater experience within the industry at issue?

  • Qualified as an expert: Has your expert a greater depth of experience-serving as an expert in more courts or in more cases?

Before asking these questions, know how the expert will respond and be sure that the difference in qualifications is sufficient to distinguish your expert from the opposition's.

The second scenario where voir dire may be appropriate is when you perceive weaknesses in the opposing expert's credentials. By highlighting these weaknesses you hope to either disqualify the expert or impugn his credibility. "Google" the expert's name to discover pertinent background information, such as recent cases in which the expert rendered an opinion as to value.

Following are questions posed to an expert during voir dire based on a prior court appearance.

Q. Sir, were you the expert on behalf of the wife in Smith v. Smith?
A. Yes.
Q. And was your testimony in this case explicitly rejected by the court?

Use of the opinion from a prior case effectively plants a seed in the court's mind that the expert's opinion was rejected by another court.

One question too many

Following are questions designed to undermine the opposing expert, but instead help to validate his credentials.

Q. Mr. Smith, how much of your previous experience has dealt with compensation studies in the software area?
A. I would estimate that I have prepared valuation reports for approximately 30 to 40 companies that do business in the software area.

The answer to this question reinforces the expert's experience and thus credibility before the court.

Following is another line of questioning that backfired.

Q. Have you ever been refused as an expert witness in state or federal court?
A. Yes.
Q. When was the last time that happened?
A. 1985.
Q. Since then you've been accepted?
A. Yes.

The first question established that there was a time when the witness was not qualified as an expert. By continuing the questioning, the attorney lost this advantage. The additional questions lessened the negative impact of the first question on the trier of fact. Follow-up questions demonstrated that this happened almost twenty years ago and since then every court has qualified the witness.

When cross-examining an expert on voir dire, develop a strategy as to what you want to accomplish. If you do not believe you can undermine the expert's credibility, limit your questions. Asking questions for which you do not know the answer can be harmful to your client and your case. Focus voir dire on areas in which you know you have a strong advantage.

When developing your cross-examination questions with your expert, identify specific weaknesses in the other expert's report and rank them in terms of how negatively they will impact the credibility of the report. Remember, it is not the quantity of topics explored, but the quality that will win the case. Too often attorneys try to address every weakness. The result is a cross-examination that lacks focus and allows the most important weakness to get lost in the shuffle. Work with your expert to select the most critical issues and focus on them.

Again the Internet can be a good source of articles written by the expert. Look for ones in which the expert took a position contrary to the one taken in this case. For example, in one case an expert used a key-man discount in valuing the husband's ownership interest in a company. During preparation for the case, the opposing attorney discovered an article written by the expert in which he stated that a key-man discount is never appropriate. The attorney used this article to impeach the expert's credibility and undermine his report.

Exploiting weakness

Following is a sample line of questioning to exploit a weakness in a report.

Q. Would I be correct to assume that your market approach evaluation focused on sales transactions for the same types of businesses as comparable public guideline companies?

A. Yes.

Q. And you testified that you selected the sales transactions from a study published by Mergerstat Review.

A. I selected 16 companies in which I could identify both the sales and total assets of the company.

Q. And the companies identified in your report are the only companies that are in Mergerstat Review for the relevant industry in which you could determine the assets of the companies?

A. Yes.

Q. Sir, isn't it true that Mergerstat Review includes both X company and Y company and you failed to include either one as part of your analysis even though they met your criteria?

A. Well, yes.

Q. Isn't it true that had you not excluded these two transactions, your price-to-sales multiple would have been higher and, therefore, the value would have been higher?

A. Perhaps, yes.

The purpose of this cross-examination is to demonstrate to the court that husband's expert used selective transactions. The attorney was able to demonstrate through this line of questioning that the expert had omitted important transactions that met his criteria for inclusion. More importantly, the attorney showed that had the expert used these additional transactions his valuation would have been higher.

Following is another series of questions used by an attorney to address a critical issue in a valuation. The attorney had identified the reasonable compensation adjustment as having an important impact on valuation. The husband's expert made a sizable adjustment that reduced the company's profitability and resulted in a lower value. To undermine the expert's testimony, the following questions were asked.

Q. You testified that it would cost the company $1.5 million to replace Husband, correct?

A. Yes.

Q. Where did you get that information?

A. I believe it was from my discussions with management.

Q. Did you investigate what it would cost the company to replace Husband?

A. No.

Q. You did not look at any survey reports or compensation reports to determine what a company would have to pay to compensate a person similar to Husband?

A. That is correct.

Q. Instead you relied solely on information provided by Husband?

A. Correct.

Q. Isn't it correct that had you used a less reasonable compensation your conclusion of value would have been greater?

A. Yes.

The attorney demonstrates that the expert failed to perform independent research to ascertain the appropriate compensation for husband. Furthermore, by not doing this analysis and relying solely on information supplied by husband, the expert overstated the compensation adjustment and, therefore, understated the value of the company.

Counterproductive questions

For any line of questioning, preparation is key. An unprepared attorney may incorrectly assume that his or her questions will spotlight a flaw in the expert's report. Instead, questioning may allow the expert to reinforce a critical component of the report. Following is an example of a counterproductive line of questioning.

Q. Have we established that the company has no real estate, royalties, no patents, no licenses, no investments, and no long-term contracts?

A. Correct.

Q. Mr. Smith, you agree that the company has a net asset value of $1.2 million?

A. Correct.

Q. And you attribute a fair market value of $8.87 million to the company?

A. Correct.

Q. You would agree that approximately $7.6 million of your value is based on net assets of the company?

A. No, because you are missing the fact that businesses such as this one have identifiable intangible assets.

Q. Is that what we call goodwill?

A. No, intangible assets take many forms. They include assembled workforce, going-concern value, trademarks, noncontractual relationships, and repeat patronage from some very prestigious companies.

The attorney was attempting to show that the expert's value was overstated because it was significantly greater than the net tangible value. The attorney asked questions to demonstrate that the expert overstated the value of the company. Instead, her questions allowed the expert to provide justification for his conclusion of value. By failing to recognize that there are many different forms of intangible assets, she incorrectly assumed there was no basis for the difference between the conclusions of value from the net tangible asset value.


The above examples are not intended to be all-inclusive but to provide some guidance in preparing for cross-examination of a business valuation expert. When developing questions, work with your expert to become educated regarding critical elements of your expert's and the opposing expert's report. And never forget the cardinal rule of cross-examination: before asking any question, be sure you know the answer. FA

Gary Friedlander, Esq., ASA, MBA engages in the valuation of closely held corporations and professional practices with Business and Professional Practice Valuations in Norristown, Pennsylvania. He has been engaged in the appraisal profession since 1987 and is a member of both the Pennsylvania Bar Association and the ABA Section of Family Law. Mr. Friedlander has appeared as an expert witness on valuation on numerous occasions. He can be reached at

Published in Family Advocate, Volume 29, No. 4, Spring 2007. © 2007 by the American Bar Association. Reproduced with permission. All rights reserved. This information or any portion thereof may not be copied or disseminated in any form or by any means or stored in an electronic database or retrieval system without the express written consent of the American Bar Association.