ESOP trustee’s failure to vet valuation causes significant overpayment
Inadequate trustee performance was at the center of a recent case, featuring a nontraditional ESOP structure. The court found that, if the trustee had engaged with the underlying valuation, it would have discovered numerous weaknesses and prevented the ESOP from overpaying for the company stock.
ESOP Trustee Evaded Fiduciary Duties by Delegating Valuation
Court finds ESOP trustee liable for causing plan to overpay; trustee “delegated” valuation to ESOP valuator without inquiring into valuation components, including projections, and without exploring “glaring” gaps (industry analysis) in valuation report.
Perez v. First Bankers Trust Services, Inc.
Court finds ESOP trustee liable for causing plan to overpay; trustee “delegated” valuation to ESOP valuator without inquiring into valuation components, including projections, and without exploring “glaring” gaps (industry analysis) in valuation report.
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.
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.
Defense expert testimony supports ESOP valuation and fairness opinions
A recent ESOP decision involving allegations of breach of fiduciary duty and engaging in a prohibited transaction turned on whether the ESOP trustee’s financial advisor had performed proper due diligence and issued defensible fairness and valuation analyses.
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.
In Unusual ESOP Case, 5th Circuit Validates FMV Computation
5th Circuit upholds district court’s liability and remedy findings in ESOP case; lower court’s weighting and averaging of valuation results offered by parties’ experts to compute amount of overpayment “was founded in established valuation methodology.”
Perez v. Bruister (II)
5th Circuit upholds district court’s liability and remedy findings in ESOP case; lower court’s weighting and averaging of valuation results offered by parties’ experts to compute amount of overpayment “was founded in established valuation methodology.”
ESOP valuations not on safe ground—despite final DOL rules
Although ESOP valuation experts have been exempted from the DOL’s final fiduciary rules, it’s still not safe to go back into the water, experts say.
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.
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.
New case digests added to BVLaw in the last weeks
The following is a sampling of court decisions in which determination of the value of a business was essential to the result. Many of the leading financial experts and business appraisers were involved as consultants or expert witnesses in these matters. BVLaw digests all cases where valuation methodologies or competing approaches are adjudicated.
New updates to financial analysis decisions at BVLaw
Here are a sampling of cases where issues of business valuation factored in the final court decisions. As always, BVLaw Alert’s digests, and original court documents, are available for these and other breaking decisions.
Business Valuation Cases in Brief
A review of cases that present issues of interest within the business valuation community.
Analysts Not Required to Predict the Future—Only to Probe Present Facts
In assessing fair value and adequate consideration of ESOP transaction, court considers whether appraiser should have reasonable foreseen future events affecting stock and company value.
11th Circuit Disregards Changeable Buy-Sell Agreement, but Insurance Proceeds Used for Buyout Not Included in Value
As reported in the August 2004 issue of Business Valuation Update, the issue in this estate tax case was the value of George Blount’s (decedent’s) interest in a closely held company on the date of his death.
Estate of Blount v. Commissioner (II)
The issue in this estate tax case was the value of George Blount’s (decedent’s) interest in a closely held company on the date of his death.
Keach v. U.S. Trust Co.
In assessing fair value and adequate consideration of ESOP transaction, Court considers whether appraiser should have reasonable foreseen future events effecting stock and company value.