r2 Advisors, LLC v. Equitable Oil Purchasing Co. (In re Red Eagle Oil, Inc.)
Debtor’s fuel supply rights had value either in form of an implied contract, customer relationship, or simply an income stream, court says; court does not assign specific value but finds appraiser overstated its value due to misunderstanding of key facts.
Confusion Over Key Valuation Issues Prompts Remand
In shareholder dispute, appeals court says trial court did not follow controlling shareholder agreement requiring appraiser to value the company as an entity; also, appraiser’s report left it unclear whether valuation included improper minority discount.
Swiderski Equip. v. Swiderski
In shareholder dispute, appeals court says trial court did not follow controlling shareholder agreement requiring appraiser to value the company as an entity; also, appraiser’s report left it unclear whether valuation included improper minority discount.
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.
In re Merge Healthcare Inc. Stockholders Litigation
Chancery says proxy gave disinterested shareholders sufficient information about valuation analysis underlying financial advisor’s fairness opinion to enable informed vote, and it dismisses breach-of-fiduciary-duty claims under business judgment rule.
Proxy Disclosed Sufficient Valuation Data to Allow Informed Vote on Merger
Chancery says proxy gave disinterested shareholders sufficient information about valuation analysis underlying financial advisor’s fairness opinion to enable informed vote, and it dismisses breach-of-fiduciary-duty claims under business judgment rule.
Compromised Asset Appraisals Undo Like-Kind Tax Plan
Tax Court says taxpayer’s transactions fail to meet Section 1031 requirements for income tax deferral; legal advisor’s ongoing interference with appraisal process compromised asset appraisals undergirding transactions to the point they became “useless.”
Bulloch v. Bulloch
Court says deducting personal goodwill from valuation of physician’s interest in outpatient surgical center is appropriate even if physician was not an employee of center; entity’s income and total value depended on its physician members’ patient base.
Court Treats Outpatient Surgery Center as Extension of Physician’s Practice
Court says deducting personal goodwill from valuation of physician’s interest in outpatient surgical center is appropriate even if physician was not an employee of center; entity’s income and total value depended on its physician members’ patient base.
Persuasive’ Defense Expert Testimony Defeats ESOP Overpayment Claims
Court says defense expert opinion provides “credible and persuasive” support for court’s conclusion that ESOP financial advisor produced sound fairness and valuation opinions prior to contested transaction; there was no overpayment for stock at issue.
New Jersey Court Finds Defendant’s Actions Justify DLOM in Forced Buyout
In New Jersey fair value determination, following precedent, court finds defendant’s conduct justifies use of a marketability discount because he was oppressing shareholder who created “extraordinary circumstances” necessitating forced buyout; court rejec ...
Parker v. Parker
In New Jersey fair value determination, following precedent, court finds defendant’s conduct justifies use of a marketability discount because he was oppressing shareholder who created “extraordinary circumstances” necessitating forced buyout; court rejec ...
Compromised Section 1031 appraisal sinks Exelon tax strategy for fossil fuel power plant sale
U.S. Tax Court Judge David Laro frequently has cautioned experts not to give in to hiring attorneys who want to shape the appraisal. Although federal and state discovery rules offer some protection for attorney-expert communication, there is a risk of exposure and with it a risk of damage to the expert’s work product and reputation. A recent Section 1031 case, which Judge Laro handled, illustrates what happens when the communication is discovered.
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 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.
‘Dramatic’ Valuation Adjustment Justifies Equity Committee
In a rare nod to shareholder concerns, Bankruptcy Court approves formation of equity committee based on “dramatic adjustment in valuation” and inconsistent management positions as to financial health of debtors pre-Chapter 11 and post-petition filing.
Cavallaro v. Commissioner (Cavallaro II)
Court of Appeals finds Tax Court held mistaken view of burden of proof and erred in declining to evaluate taxpayers’ multiple challenges to IRS’s expert valuation; on remand, Tax Court may consider new valuation evidence, appeals court says.
Court of Appeals Sides With Taxpayers on Right to Vet IRS Expert Valuation
Court of Appeals finds Tax Court held mistaken view of burden of proof and erred in declining to evaluate taxpayers’ multiple challenges to IRS’s expert valuation; on remand, Tax Court may consider new valuation evidence, appeals court says.
Defense expert testimony supports ESOP valuation and fairness opinions
A recent ESOP decision involving allegations of breach of fiduciary duty and engaging in a prohibited transaction turned on whether the ESOP trustee’s financial advisor had performed proper due diligence and issued defensible fairness and valuation analyses.
Tax Court Corrects Prior Valuation of LP Interest to Startling Result
On remand Tax Court recalculates decedent’s minority LP interest in family partnership by relying entirely on DCF value and giving no weight to value of company’s timberland assets; newly calculated value is half the original 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.
Debtors’ Balance Sheet Not Reliable Indicator of Assets’ Market Value
Court says debtors “appear to be hopelessly insolvent” and rejects shareholders’ call for equity committee; debtors’ prepetition published financials are not “dependable evidence” of assets’ fair market value, even if investors relied on balance sheets.
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.