I was recently an expert witness in a FINRA (Financial Industry Regulatory Authority – the regulatory arm for brokers and security firms) arbitration trial. It was an interesting experience.
The area I was giving testimony on had to do with the disadvantages of C Corporations in regards to M&A transactions in the middle market. I was able to show that in many of the deals we do it is best for the seller and buyer for the selling company to be an S-Corp or LLC. It doesn’t matter whether it’s a private equity group, a strategic partner or whether it is for a full acquisition or an investment round – being a C-Corporation is a challenge and will very likely cost the seller money (and maybe a lot of it).
The securities firm on the other side had being trying to get the client to convert from an LLC to a C-Corp (and take a piece of the company in the process), which at best was completely unnecessary and most likely costly for the client in the future.
Aside from the actual content of the testimony, this was my first time as an expert witness. It was very interesting, because the opposing attorney was a VERY aggressive bull-dog trial attorney. I thought perhaps an arbitration hearing would be low key versus an actual trial, but not so. This guy dug into each witness, raising his voice and trying his best to discredit them, or least get them to rise to his baiting so he can verbally wage battle with them.
Our attorney warned me that I would lose the battle, and to try hard not to get excited or angry. It was tough, but I never raised my voice. At one point, the opposing attorney raised his voice, hit the table and demanded to know if I knew the case-law behind why many firms incorporate in
The nicest part about the experience is that we won, and good triumphed over evil. Perhaps it’s a little harsh to characterize the other side as evil, but I did feel strongly they were in the wrong. Plus it was very easy to villainize the other attorney, so I am just going to go with that, and feel good that he lost.