Statutory Fair Value in Dissenting Shareholder Cases: Part II
This article continues the discussion of statutory appraisal that was presented in Part I in the prior issue of Business Valuation Review. Fair value, the predominant standard of value employed by state courts to value dissenters' shares in appraisal cases is, is determined by state law. In most states, fair value is the shareholder's pro rata portion of the value of a company's equity. This article discusses the approaches used by the Delaware courts' views ...
In re Appraisal of SWS Group, Inc.
In statutory appraisal, Chancery relies solely on DCF analysis, noting the instant case involving a bank holding company raises a unique situation in terms of management projections and whether and how to account for creation of excess regulatory capital.
Chancery’s DCF Upends Appraisal Arbitrage Strategy
In statutory appraisal, Chancery relies solely on DCF analysis, noting the instant case involving a bank holding company raises a unique situation in terms of management projections and whether and how to account for creation of excess regulatory capital.
In re PetSmart, Inc.
In statutory appraisal, Chancery decides to “defer” to deal price, citing a robust sales process and well-functioning market; petitioners’ DCF analysis was not a useful valuation tool where it was based on, “at best, fanciful” management projections.
‘Fanciful’ Projections Make DCF an Unreliable Tool in Appraisal Proceeding
In statutory appraisal, Chancery decides to “defer” to deal price, citing a robust sales process and well-functioning market; petitioners’ DCF analysis was not a useful valuation tool where it was based on, “at best, fanciful” management projections.
Tennessee dissenters claim Delaware block method is passé
The use of the Delaware block method in Tennessee recently came under attack in a case involving a closely held Nashville, Tenn.-based media company whose controlling shareholders had pursued a squeeze-out merger and later asked the trial court for a judicial appraisal of the dissenting shareholders' interest.
Chancery relies on income approach to determine fair value in problematic bank merger
In a statutory appraisal action, the Delaware Court of Chancery recently found the deal price did not reflect fair value because the sales process was suboptimal. Certain other methods the parties' experts used also were inadequate to the task, the court said.
Merion Capital L.P. v. Lender Processing Servs.
In appraisal action, Chancery says final merger consideration best represents fair value, noting sales process led to “meaningful price discovery”; court says with DCF too much depends on assumptions; small changes may have outsize impact on value range.
Chancery Says Solid Sales Process Lends Credibility to Deal Price
In appraisal action, Chancery says final merger consideration best represents fair value, noting sales process led to “meaningful price discovery”; court says with DCF too much depends on assumptions; small changes may have outsize impact on value range.
Chancery says bids in squeeze-out merger are not comparable
The Delaware Court of Chancery recently cut short a challenge to a going-private merger when it dismissed the plaintiffs' complaint. The plaintiffs unsuccessfully argued the defendants breached their fiduciary duties when they favored the controller's lower bid over a third-party bidder's higher offer.
Dunmire v. Farmers & Merchants Bancorp of W. Pa.
Flawed sales process makes merger price an unreliable indicator of fair value for statutory appraisal, Chancery finds; in accord with party experts, court uses discounted net income approach and adopts most of respondent expert’s inputs for its valuation.
Chancery Bases Fair Value Calculation on Income-Based Model
Flawed sales process makes merger price an unreliable indicator of fair value for statutory appraisal, Chancery finds; in accord with party experts, court uses discounted net income approach and adopts most of respondent expert’s inputs for its valuation.
Athlon Sports Communications, Inc. v. Duggan (I)
Appeals court says trial court followed applicable law when it used Delaware block method to determine fair value of dissenting shareholders’ interests; court declines to change law on valuation, saying reversal must come from state Supreme Court.
Tennessee Sticks With Delaware Block Method in Judicial Appraisals
Appeals court says trial court followed applicable law when it used Delaware block method to determine fair value of dissenting shareholders’ interests; court declines to change law on valuation, saying reversal must come from state Supreme Court.
Chancery achieves fair value with three imperfect valuation techniques
The whole is greater than the sum of its parts. Perhaps Chancellor Bouchard thought of Aristotle when he recently ruled in a statutory appraisal action that, even though the results of three common valuation techniques were unreliable indicators of value, in combination they established fair value.
Chancery Rejects Deal Price Based on Unquantifiable ‘Sales Process Mispricing’
For statutory appraisal, Chancery says sales process related to management buyout “functioned imperfectly as a price discovery tool” and gives no weight to final merger price; court relies exclusively on DCF analysis to derive fair value of the company.
In re ISN Software Corp. Appraisal Litig.
Chancery finds gap separating fair value determinations of three valuation experts in a merger involving a privately held company “alarmingly” wide; court says only the DCF, “a simple and powerful concept,” achieves a reliable indicator of fair value.
Chancery Relies on ‘Simple and Powerful’ DCF for Fair Value
Chancery finds gap separating fair value determinations of three valuation experts in a merger involving a privately held company “alarmingly” wide; court says only the DCF, “a simple and powerful concept,” achieves a reliable indicator of fair value.
In re DFC Global Corp.
Court says uncertainty about company’s future performance and viability limits reliability of values derived from DCF and multiples-based comparable company analyses as well as deal price; court blends three “imperfect techniques” to determine fair value.
Chancery Achieves Fair Value by Blending Three ‘Imperfect Techniques’
Court says uncertainty about company’s future performance and viability limits reliability of values derived from DCF and multiples-based comparable company analyses as well as deal price; court blends three “imperfect techniques” to determine fair value.
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.
In re Appraisal of Dell Inc.
For statutory appraisal, Chancery says sales process related to management buyout “functioned imperfectly as a price discovery tool” and gives no weight to final merger price; court relies exclusively on DCF analysis to derive fair value of the company.
Demand for Executive Compensation Data Lacks ‘Proper Purpose’
Appeals court finds no error in trial court’s rejection of plaintiff’s demand for inspection of corporate records on executive compensation, where expert testimony showed information was not necessary to value plaintiff’s minority interest in company.
Expert’s Poor Grasp of Valuation Issues Undercuts Shareholder Suit
Appeals court affirms soundness of going private merger; court says plaintiffs failed to point to better offer and their expert lacked formal accounting, economics, and valuation training and displayed a light grasp of issues related to company’s value.
More Valuation Data Do Not Ensure Fair Class Action Settlement
In stockholder class action, Chancery declines to approve settlement that requires plaintiffs to agree to broad release of claims in exchange for additional valuation-related information, finding it fails to meet applicable “fair and reasonable” standard.