BV News and Trends November 2023
A monthly roundup of key developments of interest to business valuation experts.
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.
BVResearch Pro adds to its archive of the ASA’s BV Review
Among many other resources, the BVResearch Pro platform contains the full archive of the Business Valuation Review going back to 1982.
Implied Control Premiums Through Delaware Appraisal Decisions
The valuation industry has utilized the concepts of control premiums and corresponding discounts for lack of control (DLOC) for decades. There has been considerable debate regarding the application of control premiums paid to acquire public companies, given the likely existence of synergies embedded within those premiums. This article analyzes implied control premiums using Delaware Court of Chancery (the “Court”) decisions in which the Court determined the fair value of the shares of formerly public companies.
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.
Business Valuation Case Law Yearbook, 2023 Edition
January 2023 PDF, Softcover (195 pages)
BVR (editor)
Business Valuation Resources, LLC
Expert can’t testify regarding legal and state of mind opinions
In a case in Delaware Chancery Court concerning breach of fiduciary duty surrounding an acquisition, a well-known expert has had the court partially exclude his testimony.
In re Columbia Pipeline Group
“In plaintiffs' action against an energy company for aiding and abetting alleged breaches of fiduciary duty by the officers of a pipeline company, the court granted a motion in limine to exclude an expert's report under Del. R. Evid. 702(a) because it expressed a legal opinion on whether the fiduciaries' conduct was reasonable. [Also], [t]he expert report impermissibly expressed opinions about state of mind, which were factual determinations for the court to make. [Finally] [t]he expert offered impermissible opinions about whether the parties believed their agreement was breached, because he interpreted the agreement using extrinsic evidence.”
Expert Excluded for Offering Legal and State of Mind Opinions in Delaware
“In plaintiffs' action against an energy company for aiding and abetting alleged breaches of fiduciary duty by the officers of a pipeline company, the court granted a motion in limine to exclude an expert's report under Del. R. Evid. 702(a) because it expressed a legal opinion on whether the fiduciaries' conduct was reasonable. [Also], [t]he expert report impermissibly expressed opinions about state of mind, which were factual determinations for the court to make. [Finally] [t]he expert offered impermissible opinions about whether the parties believed their agreement was breached, because he interpreted the agreement using extrinsic evidence.”
Business Valuation Case Law Yearbook, 2022 Edition
January 2022 PDF, Softcover (177 pages)
BVR (editor)
Business Valuation Resources, LLC
The legal coverage and in-depth analysis from the BVR legal team deliver lessons learned to help appraisers reach better and more defensible valuation conclusions. All the cases featured in this book impart important lessons about applicable legal principles, approved and discredited valuation methodology, and the act (and art) of presenting expert opinions. This must-have collection benefits both the generalist as well as the specialist.
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Recent Developments in Delaware Valuation Cases
This article discusses current developments in Delaware case law as they relate to valuation. It reviews all relevant Delaware Supreme Court decisions since 2017 and all relevant Court of Chancery decisions since 2019. We discuss the emphasis being placed by the Delaware courts on using discounted cash flow for valuations in related party transactions, as well as the substantial reliance on transaction price as the valuation measure in arm's-length transactions that have a satisfactory negotiation ...
Highlights of 2020 Delaware Valuation Decisions
This article discusses two 2020 Supreme Court decisions and eight decisions by the Court of Chancery.
Recent Cases from the Delaware Chancery: What Appraisers Need to Know Now
Join Bill Kennedy for a summary of key valuation issues ruled on by the Delaware Chancery and Delaware Supreme Court. Get coverage of recent cases and discover trends seen in the courts. Learn how the courts have treated the different valuation methods in recent cases, as well as factors to consider when applying the methods. No matter where you practice, the takeaways from this session will help valuation professionals deliver a quality, litigation-ready report.
Impact of Contractual Rights on Preferred Stock Valuations in Delaware
The rights and the value of preferred stock have been the subject of several Delaware court decisions. These decisions are particularly significant for understanding the importance of contractual rights as the defining attribute affecting the valuation of preferred stock. Directors' fiduciary duties are primarily to common shareholders, while obligations to preferred shareholders are primarily contractual. Preferred stocks' contractual rights, as interpreted in these decisions, directly affects the value of the preferred and the common. When ...
BVU News and Trends August 2019
monthly roundup of key developments of interest to business valuation experts.
BVU News and Trends July 2019
A monthly roundup of key developments of interest to business valuation experts.
Willamette gives insights into shareholder litigation
The Spring 2019 Insights from Willamette Management Associates focuses on shareholder litigation and is edited by Kevin M. Zanni.
BVU News and Trends April 2019
A monthly roundup of key developments of interest to business valuation experts.
Unequivocal ‘no’ to unaffected market price—Delaware Supreme Court strikes down Aruba Networks
In a sharp rebuke, the Delaware Supreme Court recently overturned the Court of Chancery’s confounding decision in the Aruba Networks statutory appraisal case to use the unaffected market price as the sole indicator of fair value.
Paper says Delaware blundered in Dell and DFC Global
A paper analyzes what it calls “critical mistakes” in two Delaware Supreme Court decisions concerning appraisal rights.
Aruba Networks: Should Appraisals Rely on Unaffected Market Price?
Delaware appraisal decisions in recent years have effectively endorsed the concept that the price paid in an arm’s-length transaction is “fair value” when there has been a “robust” sales process. This article examines the “troubling” ruling in which the court based its appraisal solely on the unaffected market price.
Deal price vs. the DCF: Two new Delaware cases grapple with ‘transformed’ fair value landscape
With the landmark rulings in DFC Global and Dell, the Delaware Supreme Court has given its “full-throated endorsement” of market efficiencies by declaring the deal price (minus synergies) a strong indicator of statutory fair value, say two new statutory appraisal opinions from the Court of Chancery.
Flawed thinking re: capex and the DCF
An article in the current (August 2018) issue of Business Valuation Update examines what it calls the Delaware court’s erroneous default position in fair value proceedings that capital expenditures should equal depreciation in determining terminal value in a DCF analysis.
Delaware’s Unwarranted Assumption That Capex Should Equal Depreciation in a DCF Model
Delaware fair value proceedings have predominantly adopted the erroneous assumption that capital expenditures should equal the sum of depreciation and amortization in determining terminal value. Here’s an analysis of these flawed decisions.
Delaware Chancery defends use of market price, citing recent high court rulings
A few months ago, in a statutory appraisal case, the Delaware Court of Chancery made news when it used the unaffected market price as the indicator of fair value.