Delaware’s Unwarranted Assumption That Capex Should Equal Depreciation in a DCF Model

Business Valuation UpdateVol. 24 No. 8
August 2018
Gilbert E. Matthews, MBA, CFA
Arthur H. Rosenbloom
statutory appraisal action
fair value, mergers and acquisitions (M&A), dissenting shareholder, statutory appraisal, delaware court of chancery, strategic value

Summary

Delaware fair value proceedings have predominantly adopted the erroneous assumption that capital expenditures should equal the sum of depreciation and amortization in determining terminal value. Here’s an analysis of these flawed decisions.