A partner in a Tennessee distillery making flavored moonshine felt the other two partners improperly disaffiliated him. He had not contributed to the partnership financially, but he provided his expertise and formulas for the mountain dew. He claimed the other partners stole the formulas, so he wanted to be paid for them as well as for his time and effort.

DLOM but no DLOC: The court found that the partnership owned the formulas, but the ousted partner was entitled to his one-third share of the business as of the date he left, which was December 2015. His expert’s valuation used information from 2017 and then discounted it back to 2015 to get a value of $258,000. The defendants’ expert used information known as of December 2015 and then applied discounts for lack of marketability and control to come up with a value of $23,000 for the plaintiff’s share. The court sided with the defendants’ expert. On appeal, the court noted that state statute prohibits a discount for lack of control, so the valuation was adjusted to a final value of $35,000.

The case is Boesch v. Holeman (II), 2022 Tenn. App. LEXIS 335, and a case analysis and the full opinion can be found on the BVLaw platform.

This article has been revised to reflect that the valuation expert did not modify her report. Instead, the court used the same valuation report, noted the adjustments, and declared the value to be $35,000.