New Tennessee law streamlines DLOM use in divorce valuation
When and whether to apply a discount for marketability in divorce valuations has been an open question in Tennessee, owing to some confusing court rulings. However, a recent amendment to the Tennessee Code seeks to provide clarity to valuators handling divorce cases in this jurisdiction.
Trustee Liable for Inadequate ESOP Valuation Vetting
Court finds ESOP trustee liable for allowing overpayment for company shares; trustee rushed transaction and failed to scrutinize financial advisor’s valuation ignoring red flags related to projections, use of control premium, beta, rounding up of values.
Brundle v. Wilmington Trust N.A. (II)
Notwithstanding errors related to the court’s liability and damages determinations, the court rejects trustee’s motion for reconsideration as an inappropriate effort to introduce new legal theories and a late attempt to present a competing damages methodo ...
Court Defends Earlier ESOP Liability and Damages Rulings
Notwithstanding errors related to the court’s liability and damages determinations, the court rejects trustee’s motion for reconsideration as an inappropriate effort to introduce new legal theories and a late attempt to present a competing damages methodo ...
In Big Buyout Ruling, Minnesota Court Rejects DLOM in Calculating Fair Value
In a forced buyout, court says experts were too partisan to their clients, compromising value analysis; court performs its own valuation using DCF to determine fair value of grocery business and rejects DLOM because no unfair transfer of wealth occurs.
Lund v. Lund (I)
In a forced buyout, court says experts were too partisan to their clients, compromising value analysis; court performs its own valuation using DCF to determine fair value of grocery business and rejects DLOM because no unfair transfer of wealth occurs.
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.
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 ...
Eleventh Circuit Affirms Tax Court’s Valuation of Trust’s Interest in LLC
Affirming FMV conclusion, appeals court says Tax Court did not err in focusing less on details of methodology parties’ appraisers used than on larger issue of whether hypothetical seller would be able to force distribution of majority of LLC’s assets.
Estate of Koons v. Commissioner (Koons II)
Affirming FMV conclusion, appeals court says Tax Court did not err in focusing less on details of methodology parties’ appraisers used than on larger issue of whether hypothetical seller would be able to force distribution of majority of LLC’s assets.
ESOP trustee’s failure to vet valuation causes significant overpayment
Inadequate trustee performance was at the center of a recent case, featuring a nontraditional ESOP structure. The court found that, if the trustee had engaged with the underlying valuation, it would have discovered numerous weaknesses and prevented the ESOP from overpaying for the company stock.
Brundle v. Wilmington Trust N.A. (I)
Court finds ESOP trustee liable for allowing overpayment for company shares; trustee rushed transaction and failed to scrutinize financial advisor’s valuation ignoring red flags related to projections, use of control premium, beta, rounding up of values.
Trustee Liable for Inadequate ESOP Valuation Vetting
Court finds ESOP trustee liable for allowing overpayment for company shares; trustee rushed transaction and failed to scrutinize financial advisor’s valuation ignoring red flags related to projections, use of control premium, beta, rounding up of values.
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.
Chancery Recognizes Reality of Control Premium in Third-Party Offers
Court says special committee’s accepting controlling shareholder’s lower bid over third-party’s higher offer is not sign of bad-faith dealing but of reality that “buyers of corporate control will be required to pay a premium” to acquire the whole company.
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 ...
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.
IRS inundated with comments on proposed IRC 2704 regs
Over the past week, over 100 new comments have been submitted to the IRS about the controversial proposed Section 2704 regs designed to rein in estate tax valuations. That brings the total comments to almost 200, but it's hoped that many more will come in before the due date of November 2.
In re Books a Million Stockholders Litig.
Court says special committee’s accepting controlling shareholder’s lower bid over third-party’s higher offer is not sign of bad-faith dealing but of reality that “buyers of corporate control will be required to pay a premium” to acquire the whole company.
Chancery Recognizes Reality of Control Premium in Third-Party Offers
Court says special committee’s accepting controlling shareholder’s lower bid over third-party’s higher offer is not sign of bad-faith dealing but of reality that “buyers of corporate control will be required to pay a premium” to acquire the whole company.
Two Theories of Control
This paper identifies two different theories of control premiums: One theory supposes control only benefits controlling shareholders; the other supposes control benefits all shareholders. We first examine the logical implications of each theory. We then examine the implications of each theory on the relationship between the magnitude of a control premium percentage and the percentage of controlling ownership. We analyze a database that is commonly used to quantify control premium percentages and do not find ...
Appraisers see spike in engagements due to proposed Section 2704 regs
At the ASA Advanced Business Valuation Conference last week in Boca Raton, Fla., valuation practitioners told us that they are seeing an increase in valuation engagements triggered by the proposed Section 2704 regulations. They expect the increased business to gain steam as the regs continue to sink in with attorneys, wealth planners, and clients.
Act now to avert tough IRS crackdown on estate valuations
Well-crafted comments can change the course of the controversial proposed IRC Section 2704 regs designed to curb estate valuation discounts. There's a concern that, if these regs are finalized as proposed, the federal government will go after valuation discounts in other contexts. Comments are due by November 2, and there's a public hearing in Washington on December 1.