News Category: patents


Why Del. Chancery rejects merger price in 'Dell' statutory appraisal action

It decided to give no weight to the final merger price—$13.75 per share, and a special $0.13 dividend issued to all shareholders—but rely exclusively on its own post-transaction DCF analysis to determine the fair value of the company. In so doing, the court deviated from a number of Chancery decisions—several issued in 2015—that found the deal price was the most reliable indicator of the company’s fair value. Read more >>

S Corp model now in Tax Court

At the recent NYSSCPA business valuation conference in New York City, Daniel Van Vleet (Stout Risius Ross) told the audience that the Van Vleet model (S corporation economic adjustment model) is being used for the first time in a pending U.S. Tax Court case. What’s more, both the IRS and the taxpayer are using it in this case, says Van Vleet. Read more >>

NACVA's star-studded silver anniversary conference

Shannon Pratt, Roger Grabowski, Jim Hitchner, Nancy Fannon, and the Honorable Judge David Laro of the Tax Court are just a few of valuation thought leaders dubbed by NACVA as “industry titans” who gave presentations at the organization’s 25th anniversary conference in San Diego Read more >>

Survey participants needed in new research on fair value estimation

Last year, the Public Company Accounting Oversight Board (PCAOB) issued for public comment a staff consultation paper on potential standard-setting activities related to the auditor using the work of specialists, including valuation professionals. The University of Wisconsin-Madison is conducting a survey on the role of specialists in developing and evaluating the fair value estimates used in audited financial statements. This research may help in the PCAOB’s standard setting in this regard. Read more >>

5th Circuit backs district court's fair market value determination in ESOP dispute

The district court's determination of overpayment was a function of the contract price and the stock’s fair market value on each of three transaction dates. For its FMV determination, the court considered the testimony of three noted valuation experts retained by the plaintiffs, the DOL, and the defendants respectively. Different experts used different methods, different assumptions, different estimates, and they reached different conclusions. But they all used multiple approaches to produce several FMV estimates on the transaction dates. To arrive at a final value determination, or range of values, they all averaged or weighted the results. Read more >>

Some key takeaways from the ASA/USC fair value conference

There was record attendance at the ASA/USC 11th Annual Fair Value Conference in Los Angeles. BVWire was there and here are a few takeaways from some of the sessions, all of which were excellent. Read more >>

Comments due June 24 on exposure drafts for fair value quality initiative

The ASA, AICPA, and RICS have issued two exposure drafts for public comment that relate to the ongoing initiative to improve the quality of financial reporting valuations for U.S. publicly traded companies. Comments are due June 24. Read more >>

Court admits expert's anti-'Georgia-Pacific' royalty calculation

There is no absolute requirement to develop a reasonable royalty based on the Georgia-Pacific framework. That's the takeaway from a Daubert ruling in which the court denied the defendant's motion to preclude the testimony of the opposing damages expert, who determined a reasonable royalty based on market data instead of the customary Georgia-Pacific factors. Read more >>

Healthy outlook for healtchare ASC acquisitions

The ambulatory surgery center (ASC) field will be very active this year with new transactions and partnerships, according to the “2016 ASC Valuation Survey” from HealthCare Appraisers Inc. Almost 90% of survey respondents say they plan to purchase an ASC this year, and 22% of those say they’ll acquire between six and 10 ASCs. Read more >>

Wholesale exclusion of expert testimony contravenes Daubert, 2nd Circuit says

One error in an extensive economic analysis does not automatically call into question the entire expert opinion, the 2nd Circuit Court of Appeals recently said in the context of a securities fraud lawsuit involving the drug giant Pfizer. With this pronouncement the appeals court resuscitated a class action that had died after the district court excluded the plaintiffs' loss causation and damages expert under Daubert based on errors in the expert's event study. Deprived of the testimony, the plaintiffs were unable to prove two critical elements of their claim. Read more >>

Why Bankruptcy Court declines to be bound by divorce valuation

Following the divorce, the husband filed for Chapter 13 bankruptcy and asked for confirmation of his plan. The issue was whether the plan could meet the liquidation test applicable under the Bankruptcy Code’s section 1325(a)(4). In essence, the test requires that creditors in a Chapter 13 bankruptcy receive present value payments that are at least equal to the amount the creditors would receive in a Chapter 7 case. Read more >>

Arkansas Supreme Court reverses itself on active appreciation in divorce

Under Arkansas statutory law, the increase in the value of nonmarital property is nonmarital property. But in a line of decisions going back nearly 30 years, the Arkansas Supreme Court created an exception to the statutory rule by way of the active appreciation doctrine, which says that if the growth in value is the result of the owner spouse's efforts, the increase in value is subject to marital distribution. Read more >>

Court refuses to take stand on minority discount in buyback of shares

The parties retained a sole appraiser, whom they both knew from past appraisals he had done of the company. Prior to formally engaging the appraiser, in a court hearing, both sides broached the issue of whether it was appropriate to apply a minority discount in valuing the plaintiff's shares. The court declined to weigh in on the subject, but told the parties the minority discount issue should form “part of the discussion” they needed to have over the valuation methodology. Read more >>

Florida court resists call for bright-line rule on active-passive appreciation

In this age of entrepreneurship, valuators working on divorce cases often run into the issue of active and passive appreciation. But this issue not only comes up in the context of one spouse's ownership of a business that qualifies as separate property, as a recent Florida appeals court ruling shows. The case involved the husband's separate ownership of stock in a company for which he worked and the stock's substantial appreciation in value during the marriage. The wife asked for a rule "that all appreciation of the stock of a company for which a spouse works is a marital asset." Read more >>

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