11% Blockage Discount Applied in Apartment Valuations
The taxpayer in this estate tax matter was granted a 20% fractional interest discount and an 11% blockage discount with apartment house properties, based on comparable sales and an analysis of market conditions and the economy.
Fractional Interest and Blockage Discount Considered
The Tax Court considered the size of discounts for blockage and fractional interests on nine rental properties.
New measures of risk that really work!*
I've often said that the greatest challenge for skilled business appraisers is to quantify risk and translate the results into a required rate of return (discount rate). The latest work of Roger Gra ...
ASA International Appraisers Conference Presentation Summaries
n Discount Settlements on Recent Family Limited Partnership Cases Curtis Kimball, ASA, CFA Willamette Management Associates Curtis Kimball discussed the increasingly popular medium for e ...
Expert witness for IRS attacks size premium part of discount rate
At every one of the several merger & acquisition meetings that I have attended in recent months, both buyers and intermediaries consistently say that smaller companies usually sell at lower multip ...
Valuing a Contingent Liability
"Valuing a Contingent Liability," King, Alfred M., M&A Today , April 1999, pp. 10-11. During an acquisition, when a buyer and seller disagree about the earnings outlook for the target company ...
MPM Enterprises, Inc. v. Gilbert (III)
At issue is whether or not the Court of Chancery committed legal error or abused its discretion in its choice and application of appraisal methods.
Merger Terms and Unconsummated Prior Offers Not Relevant to Fair Value Determination
This case came before the Delaware Supreme Court on appeal from the Court of Chancery opinion in this statutory appraisal action.
On earning power & creative methodology
[T]he phrase 'earning power' must imply a fairly confident expectation of certain future results. It is not sufficient to know what the past earnings have averaged, or even that they disclose a defin ...
Reflections on Valuing S Corporations
Sliwoski, Leonard, "Reflections on Valuing S Corporations ," Business Valuation Review , December 1998, pp. 141-145. According to Sliwoski, there are two options for valuation professionals to con ...
Build-up vs. CAPM Method
In the Income Approach Example on page 2 of the September BV Update , you show the calculation of a discount rate using the CAPM method. I have several questions about the calculation: 1.
Valuing Intangible Assets Now Available!
Valuing intangible assets is a discipline that is critically important to business appraisers and others interested in valuing businesses and business interests. As it should, the sophistication of the business valuation profession is increasing at an exponential rate.
MPM Enterprises, Inc. v. Gilbert (II)
At issue are the components of the WACC: the cost of debt, the cost of equity and the debt to total capital ratio.
MPM Enterprises, Inc. v. Gilbert (I)
At issue is the fair value of petitioner's shares of a screen printer manufacturer after merger with a manufacturer and marketer of industrial materials.
New studies quantifying size premiums offer strong cost of capital support
Roger Grabowski is a partner and national director of Price Waterhouse LLP Valuation Services Group. David King is a manager with Price Waterhouse LLP in their Chicago office. This repor ...
Quantifying marketability discounts
I am in the process of completing my demonstration reports for my CBA. I used a 30% LOM discount after deriving a value for a closely held, small business using the Ibbotson build up method.
Plaintiffs claim fraudulent conveyance in failed LBO
The consolidated cases arose from the leveraged buyout (LBO) of Van Dusen Airport Service Company ("VDAS") in August 1988. Plaintiffs are holders of senior subordinated notes issued by VDAS ...
'Safe Harbor Rate' Not Adequate to Present Value Note for Gift Taxes; Circuits Disagree on Issue
Taxpayer transferred assets in return for a promissory note bearing interest at the then current "safe harbor" interest rate, which was below the prevailing market rate.
MFS/Sun Life Trust v. Air Partners
At issue is the valuation of Van Dusen Airport Services Company.
Schusterman v. United States
At issue is the taxpayers arguement that their use of the six percent safe harbor rate under I.R.C. 483 prevents the IRS from using the prevailing market interest rate to determine the dis ...
Nebenzahl v. Miller
At issue is breach of fiduciary duties in connection with a merger agreement.
Wells v. Shearson Lehman/American Express
At issue is the valuation of stock in a management buyout, in which shareholder argues that the board and shareholders were misinformed as to the value of the stock.
Samjens Partners 1 v. Burlington
At issue are the terms of a merger agreement including breach of fiduciary duty.
Horwitz v. Southwest Forest
At issue are the rights of the stockholders in regards to "poison pill" warrants.
Tri-Continental Corp. v. Battye
At issue is the value shareholders should be paid for their stock if they don't agree with the merger.