Lone dissenter of medical merger challenges share valuation
In a California case, a physician was a nonexclusive provider to a physician network and was one of 75 shareholders.
How to Address Market Efficiency for Appraisal Hearings
In statutory appraisal matters in the Delaware Court of Chancery, the court has shifted its attention away from dueling experts and more toward using a stock’s market price as the best measure of fair value. Valuation experts who come up with a different value would, therefore, need to prove that the market is not efficient.
BV News and Trends September 2023
A monthly roundup of key developments of interest to business valuation experts.
Court has limited menu for steakhouse valuation
In a Michigan case, two 50% owners of a Ponderosa steakhouse were locked in a battle over the Old West-themed eatery, with both owners engaging in oppressive conduct against the other. They left it up to the court to decide their fate.
Takeaways From ASA’s ESOP Virtual Conference
ESOP valuation basics, sell-side transactions, issues with mature ESOPs, and common critiques with valuations in litigation were the topics of discussion at ASA ESOP Virtual Conference.
BV News and Trends August 2023
A monthly roundup of key developments of interest to business valuation experts.
Valuation Implications of the Changing ESOP Litigation Landscape
The tide has started to turn with respect to litigation over ESOP valuations, speakers reported at the recent ASA ESOP Virtual Conference. There has been a major court victory and pressure from the ESOP and valuation profession, and now the DOL has committed to moving forward—hopefully— with long-awaited regulations on the valuation of company shares to be bought by an ESOP.
Dealing with market efficiency in appraisal hearings
Weary of dueling experts, the Delaware Court of Chancery has shifted its attention more toward using a stock’s market price as the best measure of fair value in statutory appraisal matters.
Appraisal Review—Read Between the Lines, Too!
Reviewing a business valuation report is different than just reading through it and looking for errors. A good review considers not just the data presented, but also the underlying assumptions, language selection (looking for bias for or against the subject business), and overall structure of the document. We can be asked to review an appraisal report for almost as many different purposes as there are for writing one. You might be handed a report and ...
Chancery Court Determines Value of Shares by Applying Average of GPCM and DCF Methodologies
In a long and complex opinion, the Delaware Court of Chancery determined the value per share of stock in a former stockholder’s appraisal action. The per-share value was reached by ascribing equal weight to adjusted versions of the comparable companies analysis (GPCM) the stockholder advanced and the discounted cash flow analysis the company advanced. The other methodologies were rejected. The use of the GPCM represented the first use of that method in some years.
HBK Master Fund L.P. v. Pivotal Software, Inc.
In a long and complex opinion, the Delaware Court of Chancery determined the value per share of stock in a former stockholder’s appraisal action. The per-share value was reached by ascribing equal weight to adjusted versions of the comparable companies analysis (GPCM) the stockholder advanced and the discounted cash flow analysis the company advanced. The other methodologies were rejected. The use of the GPCM represented the first use of that method in some years.
Caution: Mixed M&A landscape for physician practices
A rapidly changing and mixed transaction volume for physician practices signals caution to valuation analysts looking to historical transactions for guidance and comparables, advises a recent post from Weaver, the assurance, tax, and advisory firm.
Preview of TAF guidance on CSRP
The Appraisal Foundation (TAF) has a working group that is developing voluntary guidance on the company-specific risk premium (CSRP), which it has identified as an area that lacks uniformity in practice.
Divorce valuation is too little, too late
This is another in a rash of cases where one side either did not engage a valuation expert or did not use the expert to the best advantage.
CMS Confirms That It’s Out of the FMV Business
Business Valuation Update was fortunate to get a preview of an important podcast with a Centers for Medicare & Medicaid Services (CMS) official, who confirmed that the government will look to the valuation community for Stark compliance when it comes to the methodology for determining the fair market value (FMV) of physician compensation.
Fair Value, Statutory Appraisals, Crypto, ESG, PE Deals, and More at the NYSSCPA BV Conference
As usual, the annual New York State Society of CPAs’ Business Valuation and Litigation Services Conference presented some very interesting and useful information. This article provides a recap of what was discussed.
Physician Shareholder Asserts Transaction Bonuses Breach Board’s Fiduciary Duties—Appeals Court Finds Them Just and Reasonable
A physician shareholder claimed that the fair market value of his one share (of 75 total shares) was undervalued when the physician practice was merged and sold to NAMM California, a company that develops and manages physician provider networks. NAMM paid $18 million in the merger, and over $12 million of that amount was paid to individual physician shareholders in the form of “transaction bonuses.” The remaining almost $6 million was paid pro rata to the shareholders. The plaintiff appealed the judgment of the California trial court, but the appellate court deemed the transaction bonuses as “just and reasonable” and affirmed the trial court.
Ghaly v. Riverside Cmty. Healthplan Med. Grp.
A physician shareholder claimed that the fair market value of his one share (of 75 total shares) was undervalued when the physician practice was merged and sold to NAMM California, a company that develops and manages physician provider networks. NAMM paid $18 million in the merger, and over $12 million of that amount was paid to individual physician shareholders in the form of “transaction bonuses.” The remaining almost $6 million was paid pro rata to the shareholders. The plaintiff appealed the judgment of the California trial court, but the appellate court deemed the transaction bonuses as “just and reasonable” and affirmed the trial court.
August 1 deadline for The Appraisal Foundation board members
The Appraisal Foundation is currently conducting its annual search for qualified candidates to serve on the Appraisal Standards Board (ASB) and the Appraiser Qualifications Board (AQB).
Bankruptcy Court Determines Fair Value Under Asset Approach With ‘Limited Evidence’ Available to It
This case involved a hotly contested battle over the fate of a Ponderosa restaurant in Michigan. The two owners, having had a falling out, pursued contentious litigation to wrest control of the restaurant from each other. Having no business valuation available to the court, the court was left with a real estate appraisal and limited evidence of assets and liabilities to determine the fair value of a 50% interest in the restaurant to be used in the buyout of one of the shareholders by the other shareholder.
Herremans v. Fedo (In re Herremans)
This case involved a hotly contested battle over the fate of a Ponderosa restaurant in Michigan. The two owners, having had a falling out, pursued contentious litigation to wrest control of the restaurant from each other. Having no business valuation available to the court, the court was left with a real estate appraisal and limited evidence of assets and liabilities to determine the fair value of a 50% interest in the restaurant to be used in the buyout of one of the shareholders by the other shareholder.
‘Fawning terms’ help sink valuation
In an Iowa divorce case, the appellate court affirmed the trial court’s decision to reject the valuation of the husband’s expert for one of his three businesses.
New Valuation Credential Set to Launch for Healthcare Compensation Experts
The American Association of Provider Compensation Professionals (AAPCP) is set to unveil the Certified in Provider Compensation Valuation (CPCV) credential this summer. The news was announced at the AAPCP’s annual conference in Nashville April 26-28. A number of valuation professionals have already signed up for the training courses.
BV News and Trends June 2023
A monthly roundup of key developments of interest to business valuation experts.
The Appraisal Foundation seeks ASB and AQB board members
Many valuation experts give back to the profession by serving on various boards and committees.