There are moments in business when inviting an independent third party is beneficial. In this case, bringing in an independent analyst—or even several—to provide diverse opinions can be valuable. Of course, the approach depends on how important and valuable the deal is. If the spending on consultants doesn't justify the value of the dispute, or if the disagreement is non-negotiable, you might consider exiting the investment. However, if the deal is worth it, finding common ground through external expertise could be the best course of action.

When valuation disputes arise (and this will happen the sooner or later.), you should redirect the conversation to future growth potential rather than focusing only on your current numbers. Therefore: Focus on future growth, not just present value (PV) In one portfolio company, a disagreement on valuation emerged between co-investors. We aligned by shifting the focus to future projections and the company's roadmap for scaling. By discussing strategic milestone –such as product development and international expansion – everyone "suddenly" started seeing the long-term value. This shifted the conversation away from immediate differences, helping us find a common ground rooted in the company’s real potential.

Valuation disputes with co-investors can be challenging, but finding common ground often requires a balance of data-driven insights and open dialogue. In my experience, transparency is key- start by aligning on the fundamentals. Review the portfolio company’s financial performance, market trends, and future growth potential to establish a shared understanding of its value.

In a valuation dispute with co-investors, start by aligning on shared objectives, focusing on maximizing long-term value. Use market comparables and industry benchmarks to provide objective data, reducing emotional bias. Consider hiring a third-party firm for an independent valuation. Explore different valuation methods like DCF, EBITDA, and revenue multiples to find common ground. Suggest performance-based terms, such as earn-outs, to adjust valuation based on future growth. Mediation or structured discussions can help resolve deadlocks. Prioritize maintaining a positive relationship for long-term collaboration over short-term disagreements.

Start by aligning on common goals, such as maximizing long-term value. Shift the focus to shared value drivers like revenue growth and market positioning. Use a mix of quantitative methods such as discounted cash flow, comparables, and precedent transactions to present a balanced view. Bringing in an agreed upon third-party valuation expert can offer an unbiased perspective. Additionally, consider a contingent valuation structure like an earn-out, tying valuation to future performance. This aligns incentives and shifts the focus from current valuation to future potential.