Uncertainty Over Key Inputs Compromises DCF, Chancery Says

Business Valuation UpdateVol. 22 No. 1
Legal and Court Case Update
January 2016
7372 Prepackaged Software
shareholder dissent/oppression
expert testimony, fair value, discounted cash flow (DCF), merger, statutory appraisal, reliability, synergy, projections, equity risk premium (ERP), comparable companies method

Merion Capital LP & Merion Capital II LP v. BMC Software
2015 Del. Ch. LEXIS 268
October 21, 2015
US
State Court
Delaware
Court of Chancery
Borris J. Steffen (petitioners); Richard S. Ruback (company/respondent)
Glasscock

Summary

Chancery favors merger price, without synergy adjustment, over DCF-generated value, noting uncertainties over key inputs such as projections, equity risk premium, terminal growth rate as well as the “wildly divergent” DCF results of the parties’ experts.

See Also

Merion Capital LP & Merion Capital II LP v. BMC Software

Chancery favors merger price, without synergy adjustment, over DCF-generated value, noting uncertainties over key inputs such as projections, equity risk premium, terminal growth rate as well as the “wildly divergent” DCF results of the parties’ experts.