BV News and Trends October 2024
A monthly roundup of key developments of interest to business valuation experts.
BV News and Trends September 2024
A monthly roundup of key developments of interest to business valuation experts.
DOL prevails in ESOP valuation lawsuit
The former owners of the company behind those ubiquitous Cruise America RVs must not be happy campers after a recent ruling from an Arizona court. The court found that they violated ERISA and breached their fiduciary duties when setting up an ESOP that the DOL said overpaid them for their shares.
Senators to DOL: Get moving on ESOP valuation rule
U.S. Senator Roger Marshall (R-KS) led a bipartisan letter calling on the U.S. Department of Labor (DOL) to complete a final regulation governing the “adequate consideration” exemption for employee stock ownership plans (ESOPs).
Reminder: Email your senator regarding DOL’s ESOP valuation rule
Regardless of whether your practice involves ESOP valuations, you will want to consider a request from The ESOP Association (TEA) to email your senator about signing a bipartisan letter being sent to the Department of Labor (DOL) about an important valuation rule.
Action needed! Email your senator re: DOL’s ESOP valuation rule
Regardless of whether your practice involves ESOP valuations, you will want to consider a request from The ESOP Association (TEA) to email your senator about signing a bipartisan letter being sent to the Department of Labor (DOL) about an important valuation rule.
The Aftermath of the United States Supreme Court’s Decision in Connelly v. Internal Revenue Service: Q&As on its Meaning and the Ramifications on Future Planning, Particularly on Business Valuation
The United States Supreme Court recently unanimously affirmed the Eighth Circuit in Connelly Est. v. Internal Revenue Service. Long-time co-collaborators Ed Morrow and Paul Hood, who’ve weighed in at every level of this case, discuss the decision and its potential ramifications on planning, particularly on business valuation.
DOL’s ESOP valuation slammed in amicus briefs to SCOTUS
The American Society of Appraisers (ASA) and The ESOP Association (TEA) have filed amicus briefs with the U.S. Supreme Court related to the Bowers ESOP case in support of the petitioners’ attempt to recover attorneys’ fees and costs from the government.
Kasnetz v. Kasnetz
The known or knowable issue arises frequently in valuations of businesses. This Hawai’i divorce case once again affirmed that information or data that was not known or knowable at the date of valuation cannot be used to determine the value at that date.
Hawai’i Appellate Court Affirms Rejection of Value for Violation of Known or Knowable
The known or knowable issue arises frequently in valuations of businesses. This Hawai'i divorce case once again affirmed that information or data that was not known or knowable at the date of valuation cannot be used to determine the value at that date.
In re Gerber
The court-appointed valuation expert in this divorce case determined a control value by deducting a discounted minority interest value from the 100% fair market value. Both the trial court and appellate court accepted this methodology.
Illinois Court Adopts Valuation of Its Own Expert—Determines Control Value by Deducting Discounted Minority Value
The court-appointed valuation expert in this divorce case determined a control value by deducting a discounted minority interest value from the 100% fair market value. Both the trial court and appellate court accepted this methodology.
Connelly v. United States (II)
The U.S. Supreme Court took on this case because of a split between two circuit courts. In the first case, Blount v. Commr., the 11th Circuit Court of Appeals reversed the Tax Court and excluded the insurance proceeds that accrued as a result of the death of the shareholder. In the Connelly case, the Tax Court once again included the insurance proceeds in the estate. The 8th Circuit affirmed the Tax Court, and the Supreme Court now unanimously affirmed the 8th Circuit, thus negating the decision of the 11th Circuit in Blount.
U.S. Supreme Court Affirms Inclusion of Corporate-Owned Life Insurance in Value of Company for Estate Tax Purposes
The U.S. Supreme Court took on this case because of a split between two circuit courts. In the first case, Blount v. Commr., the 11th Circuit Court of Appeals reversed the Tax Court and excluded the insurance proceeds that accrued as a result of the death of the shareholder since there was a binding liability to pay the proceeds to the estate of the decedent. In the Connelly case, the Tax Court once again included the insurance proceeds in the estate. The 8th Circuit affirmed the Tax Court, and the Supreme Court now unanimously affirmed the 8th Circuit, thus negating the decision of the 11th Circuit in Blount.
BV News and Trends March 2024
A monthly roundup of key developments of interest to business valuation experts.
Smith v. Smith
In this divorce case appeal, the appeals court remanded to the Chancery Court the issue of separate versus marital property. The appellate court determined that one of the husband’s businesses was marital property and not separate property as the Chancery Court decided. It remanded that portion of the Chancery decision with instructions to change the ruling and determine a value for the now marital property business—but without any goodwill.
Appellate Court (Mississippi) Affirms That Goodwill Is Not a Marital Asset
In this divorce case appeal, the appeals court remanded to the Chancery Court the issue of separate versus marital property. The appellate court determined that one of the husband’s businesses was marital property and not separate property as the Chancery Court decided. It remanded that portion of the Chancery decision with instructions to change the ruling and determine a value for the now marital property business—but without any goodwill.
In re Hebert
In this New Hampshire divorce appeal, the husband appealed the trial court’s property division, the awarding of 13 years of alimony, awarding of 100% of the proceeds of the sale of residences, and awarding 50% of the value of the husband’s business and the real estate where the business was located. The Supreme Court of New Hampshire affirmed in part and remanded in part.
New Hampshire Supreme Court Affirms in Part and Vacates in Part and Remands Divorce Trial Court—Husband Fails to Provide Support for Expenses
In this New Hampshire divorce appeal, the husband appealed the trial court’s property division, the awarding of 13 years of alimony, awarding of 100% of the proceeds of the sale of residences, and awarding 50% of the value of the husband’s business and the real estate where the business was located. The Supreme Court of New Hampshire affirmed in part and remanded in part.
Fair Market Value: A Complicated Standard
This article was triggered by a recent article by Jim Hitchner that maintained that it is a “myth” that fair market value assumes a financial buyer, without synergistic benefits. The author believes the answer to the question is more nuanced than the term “myth” suggests, which prompted him to revisit his thinking on the concept.
BVLaw Review: The Top Valuation Cases of 2023
The BVLaw platform added approximately 70 cases during 2023, bringing the total to about 4,300 cases in the database. The cases are all related in some way to valuation, economic damages and lost profits, and other litigation. This article is a rundown of some of the more important cases for 2023.
Cronan v. Cronan
This case concerned an appeal of a family court magistrate’s decision as to the value of marital assets and the distribution thereof and denial of alimony to the wife. The plaintiff, the husband, is a physician shareholder in a medical imaging practice. The practice had a shareholder agreement that provided for the price to buy into and sell out of the practice. The wife’s expert determined the value of the husband’s shares under the fair market value standard but the trial court and supreme court went with the agreement value.
Rhode Island Supreme Court Affirms Value of Interest in Medical Practice Per Shareholder Agreement and Equitable Distribution of Assets
This case concerned an appeal of a family court magistrate’s decision as to the value of marital assets and the distribution thereof and denial of alimony to the wife. The plaintiff, the husband, is a physician shareholder in a medical imaging practice. The practice had a shareholder agreement that provided for the price to buy into and sell out of the practice. The wife’s expert determined the value of the husband’s shares under the fair market value standard but the trial court and supreme court went with the agreement value.
BV News and Trends December 2023
A monthly roundup of key developments of interest to business valuation experts.
Grabowski analyzes COLI valuation issue SCOTUS will decide
The U.S. Supreme Court has agreed to hear a case involving a valuation issue in order to resolve a circuit split.