Gift Tax Case Pivots on Key Assumption Informing Valuations
Taxpayer parents incurred gift tax liability when, based on improper valuations, they agreed to merge their S corp. with their sons’ S corp. and accepted an unduly low interest in the new company while sons received an unduly high interest, Tax Court says ...
Court Relies on DCF to Derive Value of ‘Sui Generis’ Company
NY court rejects comparable analyses to value “truly incomparable” beverage company and relies solely on DCF; court says the fact that expressions of interest to buy the company never became bona fide offers indicates liquidity risk and supports 25% DLOM.
Bank of America, N.A. v. Veluchamy (In re Veluchamy)
In a fraudulent transfer case involving S corp, court says valuation should reflect that buyers of S corps would experience a reduction in the value of the corporations' earnings because of the need to pay personal income taxes on those earnings.
Charron v. Sallyport Global Holdings, Inc.
In a buyout case, the court finds that, in reselling company, defendants undervalued rollover equity interest by double counting risks specific to the company in order to avoid triggering windfall provision in prior sales agreement favorable to plaintiff.
Industry Characteristics Bolster Reliance on Net Asset Value
In fight over plan confirmation, court finds nature of industry supports debtors’ reliance on net asset value approach to value Chapter 11 dry bulk shipper but not to the exclusion of more traditional methods; however, court rejects use of DCF.
Expert’s Tax Appraisal Weathers Frontal Daubert Attack
Appeals court says tax tribunal did not abdicate its gatekeeper role under Rule 702 when admitting taxpayer expert’s appraisal, where the expert was qualified and used a reliable methodology; a searching inquiry into the underlying data was not necessary.
Ferolito v. AriZona Beverages USA LLC
NY court rejects comparable analyses to value “truly incomparable” beverage company and relies solely on DCF; court says the fact that expressions of interest to buy the company never became bona fide offers indicates liquidity risk and supports 25% DLOM.
Can You Trust a Valuation That Falls Short of AICPA Standards?
Appeals court finds error in trial court’s refusal to value business; even if limited data caused expert’s estimate to fall short of AICPA standard, it was based on the market approach, a “sound and reasonable method to value a closely-held business.”
Cavallaro v. Commissioner
Taxpayer parents incurred gift tax liability when, based on improper valuations, they agreed to merge their S corp. with their sons’ S corp. and accepted an unduly low interest in the new company while sons received an unduly high interest, Tax Court says ...
Court Finds Facts Back Expert’s Value-Per-Subscriber Metric
Court finds trust failed to prove insolvency; its expert’s use of DCF alone was inappropriate where there were no cash flow projections untainted by fraud, but competing expert’s market-based approach and value per subscriber analysis were solid.
B & L Development LLC v. City of Norton Shores
Appeals court says tax tribunal did not abdicate its gatekeeper role under Rule 702 when admitting taxpayer expert’s appraisal, where the expert was qualified and used a reliable methodology; a searching inquiry into the underlying data was not necessary.
In re Genco Shipping & Trading Ltd.
In fight over plan confirmation, court finds nature of industry supports debtors’ reliance on net asset value approach to value Chapter 11 dry bulk shipper but not to the exclusion of more traditional methods; however, court rejects use of DCF.
Hugh v. Hugh
Appeals court finds error in trial court’s refusal to value business; even if limited data caused expert’s estimate to fall short of AICPA standard, it was based on the market approach, a “sound and reasonable method to value a closely-held business.”
May Court Disregard Shareholder Agreement in Judicial Buyout?
Appeals court finds in judicial buyout, district court properly updated stock price listed in shareholder agreement and could disregard experts’ market approach values, but it erred when it abandoned the contract’s terms as to the manner of the payment.
Valuations Underpin DE Chancery’s Ruling in Going-Private Merger
DE Supreme Court affirms use of business judgment review where controlling stockholder buyout includes two procedural protections for minority and finds valuations from independent financial advisor confirmed merger was favorable to minority stockholders.
Valuations Underpin DE Chancery’s Ruling in Going-Private Merger
DE Chancery adopts business judgment review standard where controlling stockholder buyout includes two procedural protections for minority and finds valuations from independent financial advisor demonstrate merger was favorable to minority stockholders.
Adelphia Recovery Trust v. FPL Group, Inc. (In re Adelphia Corp.)
Court finds trust failed to prove insolvency; its expert’s use of DCF alone was inappropriate where there were no cash flow projections untainted by fraud, but competing expert’s market-based approach and value per subscriber analysis were solid.
Kahn v. M&F Worldwide Corp.
DE Supreme Court affirms use of business judgment review where controlling stockholder buyout includes two procedural protections for minority and finds valuations from independent financial advisor confirmed merger was favorable to minority stockholders.
Piche v. Braaten
Appeals court finds in judicial buyout, district court properly updated stock price listed in shareholder agreement and could disregard experts’ market approach values, but it erred when it abandoned the contract’s terms as to the manner of the payment.
Merger-Related Projections Pass Muster With Delaware Chancery
In statutory appraisal action, Court of Chancery discredits respondent’s comparable company analyses because the comparables were significantly smaller than the target and not in the same industry or had different multiples; as to the DCF analysis, the ta ...
Chancery Trusts DCF to Home In on Common Stock Value
Court of Chancery finds the defendant directors proved “entire fairness” despite a management incentive plan and large liquidation preference that rendered the sales process unfair to common stockholders and left them with no proceeds; defendant expert’s ...
In re Trados Inc.
Court of Chancery finds the defendant directors proved “entire fairness” despite a management incentive plan and large liquidation preference that rendered the sales process unfair to common stockholders and left them with no proceeds; defendant expert’s ...