In a crunch, court adopts company’s DCF model as fair value indicator
In a statutory appraisal action prompted by the 2016 buyout of minority shareholders by the controller of a private company, the Delaware Court of Chancery recently found there was no meaningful market-based evidence of fair value and neither expert opinion, based on standard valuation methods, was “wholly reliable.”
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Advising clients on the meaning of ‘fair value’
The phrase ‘fair value’ continues to bedevil the high courts and create very different expectations when parties are forced to figure out what to pay when buying and selling.
Free webinar reveals divorce valuation insights
Mark your calendar for an August 27 free webinar designed as a lightning round of observations and advice about divorce valuations in today’s challenging environment.
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.
Raley v. Brinkman
In LLC member buyout dispute, the Court of Appeals finds the term “fair value” does not contemplate the use of shareholder-level discounts. However, tax affecting is relevant evidence when determining the going-concern value of subject S corp. Trial court must consider evidence on tax affecting.
Tennessee Appeals Court Clarifies Use of Discounts and Tax Affecting in Court-Ordered LLC Buyout
In LLC member buyout dispute, the Court of Appeals finds the term “fair value” does not contemplate the use of shareholder-level discounts. However, tax affecting is relevant evidence when determining the going-concern value of subject S corp. Trial court must consider evidence on tax affecting.
Valuations for divorce: That was then, this is now (Part 2)
It’s a whole new ballgame for valuations in the context of marital dissolution, which is why the AAML/BVR Virtual Divorce Conference will focus on the most important issues impacted by all of the recent changes.
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 ...
‘Particular facts’ justify discounts in mandatory buyback of minority interest, says Missouri high court
Context is “crucial,” the Supreme Court of Missouri recently said in upholding the use of discounts in the court-ordered buyout of a minority owner’s shares in a family business.
Experts Need Not Be ‘Blue-Ribbon Practitioners’ to Meet Rule 702 Qualification Requirement
In bankruptcy dispute, court rejects parties’ Daubert challenge to opposing expert testimony; defense expert did not blindly rely on management projections for capital adequacy and balance sheet tests, and plaintiff’s expert did not use hindsight to find debtor was insolvent on fund transfer dates.
Official Committee of Unsecured Creditors v. Calpers Corp. Partners, LLC
In bankruptcy dispute, court rejects parties’ Daubert challenge to opposing expert testimony; defense expert did not blindly rely on management projections for capital adequacy and balance sheet tests, and plaintiff’s expert did not use hindsight to find debtor was insolvent on fund transfer dates.
Anderson v. A & R Spraying & Trucking, Inc.
In buyout dispute over closely held corporation, State Supreme Court upholds trial court’s value determination based on income-based analyses parties’ experts presented but adjusting for inconsistencies in each opinion; asset approach was inappropriate where company would continue to operate.
Calculating Fair Value, Court Uses Experts’ Income Analyses but Adjusts for Inconsistencies
In buyout dispute over closely held corporation, State Supreme Court upholds trial court’s value determination based on income-based analyses parties’ experts presented but adjusting for inconsistencies in each opinion; asset approach was inappropriate where company would continue to operate.
Valuations for divorce: That was then, this is now
For those experts grappling with business valuations in a divorce context, practical tips and advice will be presented in what had been the AAML/BVR National Divorce Conference—but has been re-engineered as the AAML/BVR Virtual Divorce Conference.
Kruse v. Synapse Wireless, Inc.
In appraisal action arising out of controller’s buyout of minority stockholders, court finds there is no reliable market evidence as to target’s fair value on merger date; none of expert valuations are “wholly reliable,” but one expert’s DCF analysis offers a “proportionately reliable conclusion.”
Lacking Any Wholly Reliable Indicators of Fair Value, Court Adopts Respondent's DCF Model
In appraisal action arising out of controller's buyout of minority stockholders, court finds there is no reliable market evidence as to target's fair value on merger date; none of expert valuations are "wholly reliable," but one expert's DCF analysis offers a "proportionately reliable conclusion."
Biton v. Kreinis
In dispute over fair value of plaintiff’s shares, court agrees with parties’ experts on use of capitalization of earnings method to value company; court rejects defense expert’s use of QuickBooks data and post-valuation-date revenue as representative annual revenue; applies key-person discount.
In Fair Value Determination, Court Says SSVS Discourages Use of Post-Valuation-Date Data
In dispute over fair value of plaintiff’s shares, court agrees with parties’ experts on use of capitalization of earnings method to value company; court rejects defense expert’s use of QuickBooks data and post-valuation-date revenue as representative annual revenue; applies key-person discount.
Bates v. Bates
In appreciation case, appeals court says it was error to value owner’s separate, minority interest in car dealership based on buy-sell agreement; however, alternate valuation by nonowner spouse’s expert offered based on standard methods, including use of discounts, provided “appropriate valuation.”
Buy-Sell Stock Agreement Does Not Determine Value of Owner Spouse’s Separate Property
In appreciation case, appeals court says it was error to value owner’s separate, minority interest in car dealership based on buy-sell agreement; however, alternate valuation by nonowner spouse’s expert offered based on standard methods, including use of discounts, provided “appropriate valuation.”
Fir Tree Value Master Fund v. Jarden Corp., (Jarden III)
High court affirms trial court’s use of unaffected market price as fair value in statutory appraisal involving merger of publicly traded company; high court rejects petitioners’ late argument that, where sale process was flawed and company failed to prove synergies, deal price should act as floor.
No ‘Long-Recognized Principle’ Against Use of Market Price as Fair Value Indicator, High Court Says
High court affirms trial court’s use of unaffected market price as fair value in statutory appraisal involving merger of publicly traded company; high court rejects petitioners’ late argument that, where sale process was flawed and company failed to prove synergies, deal price should act as floor.
Calculations of value are admissible in divorce, Alabama appeals court confirms
About two years ago, in Rohling v. Rohling, an Alabama appeals court upheld a trial court’s decision to admit into evidence a qualified expert’s estimate about the value of the owner spouse’s business based on a calculation engagement.