In a prior post, we highlighted the article “NY’s Unfair Application of Shareholder-Level Marketability Discounts,” written by Gil Matthews and Michelle Patterson (both with Sutter Securities). The article has rekindled the debate over New York's out-of-step position with respect to the discount for lack of marketability in fair value proceedings. It has also sparked calls for the BV profession to speak with “one clear voice” on this issue.
“This is a topic that is dear to my heart,” says Chris E. Best, a managing director at Acclaro Valuation Advisors. “I have a number of cases going on right now that involve this issue and just testified in a couple of cases last month. I can tell you that even in a state where this is settled law, many of the judges still do not understand the concept of fair value and need education on it.” Best goes on to say that many judges are not familiar with the case law in the state, much less such learned treatises such as O’Neal and Thompson’s “Oppression of Minority Stockholders.” Best continues: “Many of them do not have a good understanding about valuation or valuation theory. It would be great for the BV community to come out and take a consistent stance on the topic.”
William C. Quackenbush (Advent Valuation Advisors), former chair of the ASA's business valuation committee, is not surprised there are calls for the BV profession to speak with one voice on this issue. He has written a follow-up article, “DLOMs in N.Y. Statutory Fair Value Cases—A Follow-Up to Matthews.” Among other points, he suggests that the “valuation profession needs to continue its discussion regarding control level DLOMs.” The article appears in the March issue of Business Valuation Update.