EBITDA Single-Period Income Capitalization for Business Valuation
This article begins with a discussion of EBITDA, or earnings before interest, taxes, depreciation, and amortization. The focus on the EBITDA of private companies is almost ubiquitous among business appraisers, business owners, and other market participants. The article then addresses the relationship between depreciation (and amortization) and EBIT, or earnings before interest and taxes, as one measure of relative capital intensity. This relationship, which is termed the EBITDA Depreciation Factor, is then used to convert ...
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.
Fish v. GreatBanc Trust Co.
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.
Chancery achieves fair value with three imperfect valuation techniques
The whole is greater than the sum of its parts. Perhaps Chancellor Bouchard thought of Aristotle when he recently ruled in a statutory appraisal action that, even though the results of three common valuation techniques were unreliable indicators of value, in combination they established fair value.
In re DFC Global Corp.
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.
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.
Expert’s Poor Grasp of Valuation Issues Undercuts Shareholder Suit
Appeals court affirms soundness of going private merger; court says plaintiffs failed to point to better offer and their expert lacked formal accounting, economics, and valuation training and displayed a light grasp of issues related to company’s value.
More Valuation Data Do Not Ensure Fair Class Action Settlement
In stockholder class action, Chancery declines to approve settlement that requires plaintiffs to agree to broad release of claims in exchange for additional valuation-related information, finding it fails to meet applicable “fair and reasonable” standard.
In re Trulia Stockholder Litig.
In stockholder class action, Chancery declines to approve settlement that requires plaintiffs to agree to broad release of claims in exchange for additional valuation-related information, finding it fails to meet applicable “fair and reasonable” standard.
Shaky Industrial Plant Valuation Survives High Court Review
Tax court adopts taxpayer expert’s value of the loss determination underlying real market valuation of industrial plant; state’s high court affirms but notes unresolved contradiction in financial feasibility analysis underpinning expert’s final valuation.
Rubin v. Bedford
Appeals court affirms soundness of going private merger; court says plaintiffs failed to point to better offer and their expert lacked formal accounting, economics, and valuation training and displayed a light grasp of issues related to company’s value.
Obsolescence Analysis Kills Tax Court’s Property Valuation
State high court rejects tax court’s external obsolescence calculation related to special purpose property valuation, finding it represents an insufficiently explained departure from the methods the parties’ experts used and lacks support in the record.
Chancery Decries Accounting Firm’s Compromised Valuation
Chancery says major accounting firm’s merger-related appraisal represents “new low”; to achieve client’s goal of zero corporate tax liability, firm abandoned sound prior approaches and simply copied another accounting firm’s report and called it its own.
Guardian Energy, LLC v. County of Waseca
State high court rejects tax court’s external obsolescence calculation related to special purpose property valuation, finding it represents an insufficiently explained departure from the methods the parties’ experts used and lacks support in the record.
Hewlett-Packard Co. v. Benton Cnty. Assessor
Tax court adopts taxpayer expert’s value of the loss determination underlying real market valuation of industrial plant; state’s high court affirms but notes unresolved contradiction in financial feasibility analysis underpinning expert’s final valuation.
Financial Advisor’s ‘Real Client Was the Deal,’ Says Chancery
Chancery says “dropdown” of assets from parent to master limited partnership resulted in overpayment; transaction was enabled by financial advisor that took orders from parent regardless of whether opinion “made sense as a matter of valuation theory.”
Fox v. CDx Holdings
Chancery says major accounting firm’s merger-related appraisal represents “new low”; to achieve client’s goal of zero corporate tax liability, firm abandoned sound prior approaches and simply copied another accounting firm’s report and called it its own.
Court Endorses Before and After Method for Lost Profits
In Daubert case, court accepts before and after method for lost profits and diminution of value calculation but excludes parts of expert testimony because they merely restated company assumptions and conclusions without undergoing testing from the expert.
In re El Paso Pipeline Partners, L.P. Derivative Litig.
Chancery says “dropdown” of assets from parent to master limited partnership resulted in overpayment; transaction was enabled by financial advisor that took orders from parent regardless of whether opinion “made sense as a matter of valuation theory.”
High Company-Specific Risk Adjustment Distorts Valuation
In a buyout case, the court finds that, in reselling company, defendants undervalued rollover equity interest by double counting risks specific to the company in order to avoid triggering windfall provision in prior sales agreement favorable to plaintiff.
Advanced Drainage Sys. v. Quality Culvert, Inc.
In Daubert case, court accepts before and after method for lost profits and diminution of value calculation but excludes parts of expert testimony because they merely restated company assumptions and conclusions without undergoing testing from the expert.
Averaging Multiple Appraisals Yields Most Reliable FMV
In ESOP case, court finds trustees unreasonably relied on appraiser’s valuations and overpaid for company stock; court credits parties’ three experts equally and arrives at fair market value by averaging results from experts’ multiple calculations.
Charron v. Sallyport Global Holdings, Inc.
In a buyout case, the court finds that, in reselling company, defendants undervalued rollover equity interest by double counting risks specific to the company in order to avoid triggering windfall provision in prior sales agreement favorable to plaintiff.
Perez v. Bruister (I)
In ESOP case, court finds trustees unreasonably relied on appraiser’s valuations and overpaid for company stock; court credits parties’ three experts equally and arrives at fair market value by averaging results from experts’ multiple calculations.
