BV News and Trends March 2024
A monthly roundup of key developments of interest to business valuation experts.
Court figures fair value of startup biotech for dissenters
In a dissenting shareholder case in a federal district court in Georgia, neither the Black-Scholes method nor the prior transactions method convinced a court of the value of a startup biotech company.
Abeome Corp., Inc. v. Stevens
The parties did not agree on a fair value of the shares in a dissenting shareholder suit. The court, using information in evidence, including expert witness testimony from both parties’ experts, determined the fair value.
U.S. District Court Determines Fair Value of Shares
The parties did not agree on a fair value of the shares in a dissenting shareholder suit. The court, using information in evidence, including expert witness testimony from both parties’ experts, determined the fair value.
Lone dissenter of medical merger challenges share valuation
In a California case, a physician was a nonexclusive provider to a physician network and was one of 75 shareholders.
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.
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.
Physician Shareholder Asserts Transaction Bonuses Breach Board’s Fiduciary Duties—Appeals Court Finds Them Just and Reasonable
A physician shareholder claimed that the fair market value of his one share (of 75 total shares) was undervalued when the physician practice was merged and sold to NAMM California, a company that develops and manages physician provider networks. NAMM paid $18 million in the merger, and over $12 million of that amount was paid to individual physician shareholders in the form of “transaction bonuses.” The remaining almost $6 million was paid pro rata to the shareholders. The plaintiff appealed the judgment of the California trial court, but the appellate court deemed the transaction bonuses as “just and reasonable” and affirmed the trial court.
Ghaly v. Riverside Cmty. Healthplan Med. Grp.
A physician shareholder claimed that the fair market value of his one share (of 75 total shares) was undervalued when the physician practice was merged and sold to NAMM California, a company that develops and manages physician provider networks. NAMM paid $18 million in the merger, and over $12 million of that amount was paid to individual physician shareholders in the form of “transaction bonuses.” The remaining almost $6 million was paid pro rata to the shareholders. The plaintiff appealed the judgment of the California trial court, but the appellate court deemed the transaction bonuses as “just and reasonable” and affirmed the trial court.
Business Valuation Case Law Yearbook, 2023 Edition
January 2023 PDF, Softcover (195 pages)
BVR (editor)
Business Valuation Resources, LLC
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.
Learn more >>
Highlights of 2020 Delaware Valuation Decisions
This article discusses two 2020 Supreme Court decisions and eight decisions by the Court of Chancery.
Henley Mining v. Parton
In statutory appraisal case, court denies summary judgment motion arguing opposing expert’s valuation fails to meet legal definition of fair value, i.e., “the value of the company as a whole and as a going concern”; court says controlling case law does not preclude use of net asset value method.
Fair Value Standard Does Not Preclude Use of Net Asset Approach, Court Affirms
In statutory appraisal case, court denies summary judgment motion arguing opposing expert’s valuation fails to meet legal definition of fair value, i.e., “the value of the company as a whole and as a going concern”; court says controlling case law does not preclude use of net asset value method.
BVLaw Case Update
Join Jim Alerding, a veteran valuator, and Sylvia Golden, BVR’s legal editor, for a discussion of some of the most consequential recent valuation decisions. This selection of state and federal cases includes two key state court rulings on the use of discounts in valuing minority interests in buyback situations, a state court decision on the admissibility of calculations of value in divorce proceedings, an expansive statutory appraisal ruling involving a public company from a North ...
Global BVU News and Trends May 2019
Business valuation news from a global perspective.
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.
Global BV News: Valuations slanted for squeezeouts in Finland
A paper examines the choices of valuation methods and their association with redemption prices in disputes concerning private-company squeezeouts.
Ongoing saga of New York’s out-of-step position on DLOM
We’ve followed the continuing tale of New York’s inconsistent position with respect to the discount for lack of marketability in fair value proceedings (for example, see this coverage).
Contentious Lund buyout and fair value rulings survive appeal
The Minnesota appeals court recently upheld the district court’s buyout order and fair value determination related to a well-known local grocery store chain, Lunds & Byerlys.
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.
Analysis of appraisal rights
An analysis that compares appraisal rights in the U.S., France, and Romania is in the University of Pennsylvania Journal of Business of Law.
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.
Tennessee no longer mandates Delaware block method to determine fair value
For the longest time, Tennessee case law required trial courts presiding over dissenting shareholder actions to determine fair value by using the Delaware block method. In a recent ruling, the Tennessee Supreme Court struck down the requirement and Tennessee has joined the jurisdictions that allow "more modern" valuation approaches.
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