Tri County Wholesale Distributors v. Labatt USA Operating Co., LLC, 2015 U.S. Dist. LEXIS 81914 (June 24, 2015)
Discounted cash flow versus comparable transaction analysis. A federal court recently ruled on how to determine the “diminished value” of a business that lost a number of well-known beer franchise contracts under Ohio’s “successor manufacturer” statute.
The diminished value of the business was the fair market value of the franchise contracts, “which is appropriately determined using a DCF analysis,” the court said. Notwithstanding extensive plaintiff testimony on the way industry insiders trade beer brands, the court expressly rejected a gross profit multiple approach.
But did it really? When the court found the prevailing expert’s DCF was “discordant” with market conditions, it adjusted key inputs to achieve a DCF-based result that fell within the industry average.
Find out more about the case here.