Valuation Disputes – Lessons from AP v. RP
Business valuation disputes frequently extend beyond disagreements over the ultimate conclusion of value. Parties may disagree over the information relied upon, the people interviewed, the valuation methods selected, and whether the appraisal process itself was sufficiently complete.
A recent New York case illustrates another consideration: the role of an independent, court-appointed valuation expert and the professional judgment that necessarily accompanies a valuation assignment. In AP v. RP, decided by the Supreme Court of New York, Richmond County, on December 30, 2025, the court was asked to reject a business valuation prepared by its appointed forensic valuation firm. The plaintiff contended that the appraisal was incomplete because the valuator had relied on limited documentation and had not interviewed the company’s 50% owner and founder. The court declined to do so.
The Valuation Dispute
The case arose in a divorce. The defendant owned a 25% interest in a family-owned construction company. His father retained a 50% interest, while his brother held the remaining 25%. The court-appointed valuation firm concluded that the fair market value of the defendant’s 25% interest was $7,900 as of May 23, 2022, including discounts related to the minority owner’s limited control and liquidity.
The plaintiff challenged the valuation, arguing that the father’s absence from the process made the appraisal unreliable. As founder, 50% owner and controlling member, the father potentially possessed significant knowledge about the company’s finances, assets and operations. Without interviewing him, the plaintiff argued, the valuator could not adequately determine whether all assets and revenues had been disclosed or whether related-party transactions existed. The neutral expert, however, had considered the issue and concluded that an interview with the father was unnecessary.
Professional Judgment Matters
When questioned about that decision, the valuation firm responded that it had received all the information it required. The court emphasized that the firm was a qualified, independent expert and had access to the people and information it considered necessary, including the company’s accountant, who had intimate knowledge of the company’s operations. The court therefore rejected the argument that the father’s absence automatically rendered the valuation incomplete.
A business appraisal is not necessarily more reliable because the appraiser accumulates the largest possible quantity of documents or interviews every individual associated with the company. The appropriate process depends upon the facts and circumstances of the assignment. The appraiser must determine what information is relevant, assess its reliability, decide whether additional investigation is warranted, and determine whether sufficient evidence has been obtained to support the valuation conclusion.
An owner interview may be essential in some assignments. In another engagement, the appraiser may determine that the relevant information has been adequately corroborated through financial records, tax returns, third-party information or interviews with other knowledgeable individuals.
Why Neutrality Matters
A neutral expert occupies a different position from an expert retained by one of the parties. The neutral expert’s responsibility is to develop an independent conclusion based upon the applicable standard of value, available evidence and accepted professional valuation practices.
In AP v. RP, the plaintiff raised concerns about potentially undisclosed assets, revenues and related-party transactions. But the court found no failure by the defendant to cooperate with the valuation process and no concrete evidence of misconduct or collusion. Under those circumstances, the court declined to require the neutral expert to redo its work simply because one party believed an additional interview should have been conducted.
Neutrality does not make an appraisal unchallengeable. The court noted that the plaintiff retained discovery and subpoena rights to test the forensic report. Evidence of undisclosed transactions, inconsistent financial records or unexplained transfers could have produced a different result.
The broader lesson from AP v. RP is not that a particular owner does or does not need to be interviewed. It is that a qualified independent valuation expert must exercise professional judgment in determining what information and investigation are necessary to support a valuation conclusion.
Key Takeaways for Advisors
- A neutral valuation expert can provide an independent analytical foundation when the parties disagree over value, methodology or the scope of the appraisal process.
- The completeness of a valuation should be evaluated based on whether the appraiser obtained sufficient relevant and reliable information, not simply on whether every potentially knowledgeable person was interviewed.
- A neutral expert’s professional judgment remains subject to scrutiny. Concrete evidence of undisclosed transactions, inconsistent records or other anomalies may justify additional investigation.
- Challenges to a neutral valuation are more persuasive when based on specific evidence of a deficiency than on speculation about information that might have been discovered through additional procedures.