‘Fanciful’ Projections Make DCF an Unreliable Tool in Appraisal Proceeding

Business Valuation UpdateVol. 23 No. 9
BVLaw Case Update
September 2017
5999 Miscellaneous Retail Stores, NEC
453910 Pet and Pet Supplies Stores
dissenting shareholder
expert testimony, fair value, weighted average cost of capital (WACC), cash flow, discounted cash flow (DCF), fair market value (FMV), going concern, merger, statutory appraisal, projections, fairness opinion, going private

In re PetSmart, Inc.
2017 Del. Ch. LEXIS 89
May 26, 2017
US
State Court
Delaware
Court of Chancery
Mark A. Cohen (projections expert, petitioners), Kevin Dages (valuation expert, petitioners); Mark Weinstein (projections expert, company/respondent), Andrew Metrick (valuation expert, company/respondent)
Slights

Summary

In statutory appraisal, Chancery decides to “defer” to deal price, citing a robust sales process and well-functioning market; petitioners’ DCF analysis was not a useful valuation tool where it was based on, “at best, fanciful” management projections.

See Also

‘Fanciful’ Projections Make DCF an Unreliable Tool in Appraisal Proceeding

In statutory appraisal, Chancery decides to “defer” to deal price, citing a robust sales process and well-functioning market; petitioners’ DCF analysis was not a useful valuation tool where it was based on, “at best, fanciful” management projections.