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Premium Gap Closes Between Strategic and Financial Acquisitions

The difference between the premium strategic buyers pay for acquisitions versus what financial buyers pay has decreased, according to recent data in the Factset MergerStat/BVR Control Premium Study.

BV News and Trends September 2021

A monthly roundup of key developments of interest to business valuation experts.

Updated data for estimating DLOC in closely held holding companies

Closed-end fund (CEF) data are commonly used to derive discounts for lack of control (DLOC) for closely held holding companies invested in marketable securities.

Discounts inappropriate under controlling agreement, appeals court finds

In a buyout dispute involving a limited liability company, the Oregon Court of Appeals recently overturned a trial court’s decision to apply discounts when valuing the departing member’s minority interest.

How to Use New Data on Invested Capital Premiums

To estimate acquisition premiums the use of invested capital premiums is highly encouraged in certain situations. This article presents a case study and step-by-step guide to using these data that are now included in the Factset Mergerstat/BVR Control Premium Study.

Illiquidity Discounts for Restricted Equity Securities with Random or Indefinite Liquidity Horizons

Illiquidity discounts depend on the length of the trading restriction period. Existing theoretical restricted stock discount models are adapted to situations in which the trading restriction period has a well-defined fixed length. In many scenarios, the private equity investor faces a liquidity horizon that may be random or indefinite rather than of known fixed length. Stillian Ghaidarov will review a simple and robust methodology that allows us to extend the use of restricted stock discount ...

Indiana Supreme Court Issues Key Ruling on Discounts in Compelled Buybacks

Last year, in a compelled buyout, the Court of Appeals sided with the departing minority shareholder when it found discounts did not apply in a closed-market sale. In a freshly minted decision, the Indiana Supreme Court reversed the Court of Appeals, finding there was no blanket rule disallowing discounts in a compelled buyback. This is especially true where the parties exercised a shareholder agreement whose terms suggested the use of fair market value.

Tax Court allows for ‘slight’ discount for lack of control for majority interests in real estate holding companies

In a gift and estate tax dispute, the estate and Internal Revenue Service agreed to apply discounts for lack of control and marketability to the majority interests in a number of real estate holding companies.

Tax Court Allows for ‘Slight’ Discount for Lack of Control for Majority Interests in Real Estate Holding Companies

In a gift and estate tax dispute, the estate and Internal Revenue Service agreed to apply discounts for lack of control and marketability to the majority interests in a number of real estate holding companies. The U.S. Tax Court noted that, in prior decisions, the court found no discount for lack of control applied. However, given the parties’ agreement, here, the court said it would apply a “slight” or “low” discount.

Estate of Warne v. Commissioner

In a gift and estate tax dispute, the estate and Internal Revenue Service agreed to apply discounts for lack of control and marketability to the majority interests in a number of real estate holding companies. The U.S. Tax Court noted that, in prior decisions, the court found no discount for lack of control applied. However, given the parties’ agreement, here, the court said it would apply a “slight” or “low” discount.

Indiana Supreme Court issues key ruling on discounts in compelled buybacks

Last year, in a compelled buyout, the Court of Appeals sided with the departing minority shareholder when it found discounts did not apply in a closed-market sale.

BVU News and Trends January 2021

A monthly roundup of key developments of interest to business valuation experts.

Hartman v. BigInch Fabricators & Construction Holding Co., Inc. (Hartman II)

High court says there is no blanket rule against the use of discounts in a compulsory, closed-market buyback; parties’ freedom to contract right allowed for discounts under shareholder agreement that mandated buyback of plaintiff’s minority interest by company under fair market value standard.

Indiana Supreme Court Rejects Blanket Rule Against Discounts in Compulsory, Closed-Market Share Buyback

High court says there is no blanket rule against the use of discounts in a compulsory, closed-market buyback; parties’ freedom to contract right allowed for discounts under shareholder agreement that mandated buyback of plaintiff’s minority interest by company under fair market value standard.

In tax refund case, expert identifies only viable method to value stock in ‘severely distressed’ private company

The taxpayer sued the federal government for a refund, arguing she had overpaid income taxes on stock she had received as part of settling a lawsuit against her former employer.

New Control Premium Study platform makes its debut

BVR subscribers have expressed a great deal of interest in invested capital premiums, which explains why many of them attended the free webinar on enhancements to the FactSet Mergerstat/BVR Control Premium Study.

Free webinar tomorrow on new Control Premium Study platform

Take a first look at BVR’s new Control Premium Study platform during a free webinar tomorrow, November 5.

Family Matters: Standard of Value, DLOM/DLOC Discounts and Drama in BV

A buried body, sex surrogates, and family-owned business create a dramatic background for a recent court case impacting valuation. With complex minority discounts, this case kicks off a compelling discussion of key issues in family law. Experts Stacey Udell, Neil Beaton, and Ron Seigneur tackle these thorny issues with clarity and comedy. Get treated to the tricks and tips you’ll want when your next family-owned business engagement rings your doorbell.

Free webinar to unveil new Control Premium Study platform

Mark your calendar for November 5 for the very first look at BVR’s new Control Premium Study platform.

Lucero v. United States

In tax case, court approves refund, finding value of unlisted stock in distressed closely held company that taxpayer received as part of a settlement was less than stated in settlement agreement; taxpayer’s expert showed market value approach was only suitable method to calculate fair market value.

Court Adopts Taxpayer Expert’s Method to Value Unlisted Stock of ‘Severely Distressed’ Company

In tax case, court approves refund, finding value of unlisted stock in distressed closely held company that taxpayer received as part of a settlement was less than stated in settlement agreement; taxpayer’s expert showed market value approach was only suitable method to calculate fair market value.

Key Tennessee appeals court ruling finds tax affecting ‘relevant’ to fair value buyout

In a Tennessee buyout dispute involving a limited liability corporation organized as an S corporation, the parties disagreed over whether it was appropriate to tax affect in calculating the fair value of the terminated member’s interest.

Control Discounts and Premiums - What is Old and What is New

Where do they come from? Do they even exist? Should I fear using them? No, this October event doesn’t delve into the supernatural but rather attempts to demystify the methods and resources available to quantify control discounts and/or premiums. Join Jim Ewart and Jim Alerding to learn what is new, what is old, and what matters. Learn the sources, context, and usefulness of control premiums and discounts, and the best practices for determining what they ...

Boesch v. Holeman

In dispute over value of dissociated partner’s one-third interest in whiskey business, appeals court says trial court erred in adopting value determination that applied discount for lack of control; applicable partnership law requires value be based on sale of entire business as a going concern.

Partnership Statute Precludes Use of Minority Discount in Buying Out Dissociated Partner

In dispute over value of dissociated partner’s one-third interest in whiskey business, appeals court says trial court erred in adopting value determination that applied discount for lack of control; applicable partnership law requires value be based on sale of entire business as a going concern.

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