Court of Appeals Sides With Taxpayers on Right to Vet IRS Expert Valuation
Court of Appeals finds Tax Court held mistaken view of burden of proof and erred in declining to evaluate taxpayers’ multiple challenges to IRS’s expert valuation; on remand, Tax Court may consider new valuation evidence, appeals court says.
CUT Method Prevails in Amazon’s Transfer Pricing War With IRS
In transfer pricing case, Tax Court says Amazon more accurately determined buy-in and cost-sharing payments by using CUT method to value separately three types of intangible assets; IRS’s DCF analysis results in improper enterprise valuation, court says.
Amazon.com, Inc. v. Commissioner (I)
In transfer pricing case, Tax Court says Amazon more accurately determined buy-in and cost-sharing payments by using CUT method to value separately three types of intangible assets; IRS’s DCF analysis results in improper enterprise valuation, court says.
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.
AMERICAN SOCIETY OF APPRAISERS: Business Valuation Committee Special Topics Paper #3: The Use of Management's Prospective Financial Information by a Valuation Analyst
According to AICPA Professional Standards: AT Section 301 Financial Forecasts and Projections, “financial forecast is the prospective financial statements that present, to the best of the responsible party's knowledge and belief, an entity's expected financial position, results of operations, and cash flows. A financial forecast is based on the responsible party's assumptions reflecting the conditions it expects to exist and the course of action it expects to take.” In order for a valuation analyst to ...
Comparing Three Convertible Debt Valuation Models
In this article, I (a) describe and illustrate the implementation of three convertible debt valuation models, (b) show how their values for convertible debt respond to changes in the underlying valuation parameters, (c) examine the effects of changing each of the models such that the credit spread and the probability of default are not constant but vary inversely with the stock price, and (d) measure and compare the accuracy of each model when it is ...
Tennessee Sticks With Delaware Block Method in Judicial Appraisals
Appeals court says trial court followed applicable law when it used Delaware block method to determine fair value of dissenting shareholders’ interests; court declines to change law on valuation, saying reversal must come from state Supreme Court.
Misunderstanding of Facts Results in Overvaluation of Fuel Supply Rights
Debtor’s fuel supply rights had value either in form of an implied contract, customer relationship, or simply an income stream, court says; court does not assign specific value but finds appraiser overstated its value due to misunderstanding of key facts.
r2 Advisors, LLC v. Equitable Oil Purchasing Co. (In re Red Eagle Oil, Inc.)
Debtor’s fuel supply rights had value either in form of an implied contract, customer relationship, or simply an income stream, court says; court does not assign specific value but finds appraiser overstated its value due to misunderstanding of key facts.
Tennessee dissenters claim Delaware block method is passé
The use of the Delaware block method in Tennessee recently came under attack in a case involving a closely held Nashville, Tenn.-based media company whose controlling shareholders had pursued a squeeze-out merger and later asked the trial court for a judicial appraisal of the dissenting shareholders' interest.
In re Merge Healthcare Inc. Stockholders Litigation
Chancery says proxy gave disinterested shareholders sufficient information about valuation analysis underlying financial advisor’s fairness opinion to enable informed vote, and it dismisses breach-of-fiduciary-duty claims under business judgment rule.
Proxy Disclosed Sufficient Valuation Data to Allow Informed Vote on Merger
Chancery says proxy gave disinterested shareholders sufficient information about valuation analysis underlying financial advisor’s fairness opinion to enable informed vote, and it dismisses breach-of-fiduciary-duty claims under business judgment rule.
Compromised Asset Appraisals Undo Like-Kind Tax Plan
Tax Court says taxpayer’s transactions fail to meet Section 1031 requirements for income tax deferral; legal advisor’s ongoing interference with appraisal process compromised asset appraisals undergirding transactions to the point they became “useless.”
Persuasive’ Defense Expert Testimony Defeats ESOP Overpayment Claims
Court says defense expert opinion provides “credible and persuasive” support for court’s conclusion that ESOP financial advisor produced sound fairness and valuation opinions prior to contested transaction; there was no overpayment for stock at issue.
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 ...
Merion Capital L.P. v. Lender Processing Servs.
In appraisal action, Chancery says final merger consideration best represents fair value, noting sales process led to “meaningful price discovery”; court says with DCF too much depends on assumptions; small changes may have outsize impact on value range.
Chancery Says Solid Sales Process Lends Credibility to Deal Price
In appraisal action, Chancery says final merger consideration best represents fair value, noting sales process led to “meaningful price discovery”; court says with DCF too much depends on assumptions; small changes may have outsize impact on value range.
Chancery Relies on ‘Simple and Powerful’ DCF for Fair Value
Chancery finds gap separating fair value determinations of three valuation experts in a merger involving a privately held company “alarmingly” wide; court says only the DCF, “a simple and powerful concept,” achieves a reliable indicator of fair value.
Cavallaro v. Commissioner (Cavallaro II)
Court of Appeals finds Tax Court held mistaken view of burden of proof and erred in declining to evaluate taxpayers’ multiple challenges to IRS’s expert valuation; on remand, Tax Court may consider new valuation evidence, appeals court says.
Court of Appeals Sides With Taxpayers on Right to Vet IRS Expert Valuation
Court of Appeals finds Tax Court held mistaken view of burden of proof and erred in declining to evaluate taxpayers’ multiple challenges to IRS’s expert valuation; on remand, Tax Court may consider new valuation evidence, appeals court says.
Tax Court Corrects Prior Valuation of LP Interest to Startling Result
On remand Tax Court recalculates decedent’s minority LP interest in family partnership by relying entirely on DCF value and giving no weight to value of company’s timberland assets; newly calculated value is half the original value.
Chancery Achieves Fair Value by Blending Three ‘Imperfect Techniques’
Court says uncertainty about company’s future performance and viability limits reliability of values derived from DCF and multiples-based comparable company analyses as well as deal price; court blends three “imperfect techniques” to determine fair value.
Athlon Sports Communications, Inc. v. Duggan (I)
Appeals court says trial court followed applicable law when it used Delaware block method to determine fair value of dissenting shareholders’ interests; court declines to change law on valuation, saying reversal must come from state Supreme Court.