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Court of Chancery exalts stock price as most accurate indicator of fair value

The Delaware Court of Chancery recently had an opportunity to put into practice the directives the state’s high court had issued in DFC Global and Dell in terms of calculating fair value in a statutory appraisal proceeding.

Valuing Bonus Depreciation Under the New Tax Law

The Tax Cuts and Jobs Act of 2017 (the Act) provides businesses the ability to deduct capital expenditures as “bonus depreciation” for purchases of qualified property. This article provides a framework for quantifying the value of bonus depreciation in the context of the discounted cash flow method.

Valuation Experts Give Initial Thoughts on Tax Reform

Valuation experts were asked for their initial impressions on what to consider when doing valuations under the Tax Cuts and Jobs Act. This will be an evolving discussion.

In re AOL Inc.

In statutory appraisal, court finds sales process was not “Dell compliant” and declines to assign any weight to deal price; court agrees with parties’ experts that DCF best captures fair value on valuation date and arrives at final value below deal price.

Chancery Relies on DCF Where Deal Process Is Not ‘Dell Compliant’

In statutory appraisal, court finds sales process was not “Dell compliant” and declines to assign any weight to deal price; court agrees with parties’ experts that DCF best captures fair value on valuation date and arrives at final value below deal price.

Depreciation and Amortization in DCF Analyses and the Impact of the New Tax Law

Do you know how the 2018 Tax Cuts and Jobs Act will impact your financial projections and DCF calculations? Establish a foundation on the key components of cash-flow projections used in discounted cash flow analyses. Join expert Gilbert Matthews for an examination of the often-misunderstood relationship between capital expenditures and depreciation and the appropriate treatment of limited life items such as amortization in DCF analyses. Learn how changes in the corporate tax rate and capital ...

Verition Partners Master Fund Ltd. v. Aruba Networks, Inc.

In statutory appraisal proceeding, Court of Chancery says unaffected market price provides “direct evidence of the collective view of market participants” as to target’s fair value whereas deal-price-minus-synergies is a less reliable “indirect measure.”

Court Calls Stock Price ‘Most Straightforward’ Indicator of Fair Value

In statutory appraisal proceeding, Court of Chancery says unaffected market price provides “direct evidence of the collective view of market participants” as to target’s fair value whereas deal price minus synergies is a less reliable “indirect measure."

In re EM Lodgings, LLC

In granting creditor’s stay relief motion, court averages competing expert valuations and finds debtor has no equity in contested hotel; court says value gap is result of experts’ legitimate disagreements over hotel’s future performance as reflected in inputs for DCF-based analyses.

Court Accords Equal Weight to Competing DCF-Based Hotel Valuations

In granting creditor’s stay relief motion, court averages competing expert valuations and finds debtor has no equity in contested hotel; court says value gap is result of experts’ legitimate disagreements over hotel’s future performance as reflected in inputs for DCF-based analyses.

Financial Advisor’s Fairness Opinion Not Materially Misleading

Court rejects dissenting shareholder’s proxy challenge, finding board member statements about management projections are protected under applicable act’s safe harbor provision; also, court says financial advisor’s fairness opinion did not double count for risk in underlying DCF analysis.

City of Hialeah Emples. Ret. Sys. v. FEI Co.

Court rejects dissenting shareholder’s proxy challenge, finding board member statements about management projections are protected under applicable act’s safe harbor provision; also, court says financial advisor’s fairness opinion did not double count for risk in underlying DCF analysis.

Delaware Supreme Court balks at Court of Chancery’s Dell decision

Twice, in 2017, the Delaware Supreme Court struck down statutory appraisal rulings by the Delaware Court of Chancery that dismissed the importance of the market price.

Court Validates Use of IPO Valuation in Fair Value Proceeding

In shareholder suit involving pharmaceutical startup with uncertain prospects, appeals court upholds trial court’s rejection of expert testimony based on “traditional” valuation methods in favor of noncontemporary IPO valuation to determine fair value.

Dell, Inc. v. Magnetar Global Event Driven Master Fund Ltd. (II)

High Court rejects Chancery’s decision to disregard deal price entirely in favor of court’s DCF analysis; record belies Chancery’s finding that deal price undervalued company stock, High Court says, urging adoption of deal price as fair value on remand.

Delaware Supreme Court Rebukes Chancery for Disregarding Deal Price

High Court rejects Chancery’s decision to disregard deal price entirely in favor of court’s DCF analysis; record belies Chancery’s finding that deal price undervalued company stock, High Court says, urging adoption of deal price as fair value on remand.

Appeals Court Upholds Insolvency Rulings in Transfer Liability Case

Appeals court upholds Tax Court’s transfer liability rulings; there was constructive fraud in that dividend payments to appellant were not compensation for services rendered but were part of a series of transfers leading to company’s insolvency.

Tax Court Introduces Formula to Value Donated Remainder Interest

Tax Court rules for IRS in disallowing deduction for charitable contribution involving remainder interest in leased property; requisite appraisal summary omits vital information, and court’s valuation formula shows donor made gross valuation misstatement.

High Court Finds Chancery’s Weighting of Values Unexplained and Inexplicable

State Supreme Court declines to create presumption for appraisal actions that deal price is best indicator of value when merger was arm’s-length transaction, but court finds Chancery’s valuation approach lacked support in record and requires revaluation.

DCF Projections Failed to Reflect Target’s Operative Reality, Chancery Says

In joint fiduciary-appraisal action centering on Sprint’s acquisition of minority interest in related entity, Chancery says merger was entirely fair and adopts respondent expert’s DCF analysis; huge value gap is 90% due to experts’ choice of projections.

Court Stands Behind 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 ...

‘Fanciful’ Projections Make DCF an Unreliable Tool in Appraisal Proceeding

In statutory appraisal, Chancery decides to “defer” to deal price, citing a robust sales process and well-functioning market; petitioners’ DCF analysis was not a useful valuation tool where it was based on, “at best, fanciful” management projections.

Chancery’s DCF Upends Appraisal Arbitrage Strategy

In statutory appraisal, Chancery relies solely on DCF analysis, noting the instant case involving a bank holding company raises a unique situation in terms of management projections and whether and how to account for creation of excess regulatory capital.

Chancery’s fusion valuation triggers remand and some words of wisdom by Del. Supreme Court

The Delaware Supreme Court recently overturned a 2016 ruling by the Delaware Court of Chancery that arrived at fair value by weighting the results of three valuation techniques equally. The high court's Chief Justice Strine, who once headed the Chancery, found this approach was problematic and used the decision to provide valuation advice to his successor, Chancellor Bouchard, who had overseen the appraisal proceeding.

Court Validates Use of IPO Valuation in Fair Value Proceeding

In shareholder suit involving pharmaceutical startup with uncertain prospects, appeals court upholds trial court’s rejection of expert testimony based on “traditional” valuation methods in favor of noncontemporary IPO valuation to determine fair value.

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