Indiana Supreme Court Rejects Blanket Rule Against Discounts in Compulsory, Closed-Market Share Buyback
High court says there is no blanket rule against the use of discounts in a compulsory, closed-market buyback; parties’ freedom to contract right allowed for discounts under shareholder agreement that mandated buyback of plaintiff’s minority interest by company under fair market value standard.
Hartman v. BigInch Fabricators & Construction Holding Co., Inc. (Hartman II)
High court says there is no blanket rule against the use of discounts in a compulsory, closed-market buyback; parties’ freedom to contract right allowed for discounts under shareholder agreement that mandated buyback of plaintiff’s minority interest by company under fair market value standard.
Navigation Through the Maze in Complex Debt Instruments Valuation
Global convertible security issuance has surged in the wake of the COVID-19 outbreak as companies rush to raise cash to see them through the economic impact. This has resulted in an increase in demand for fair valuation requirement for convertible instruments. However, determination of fair value of convertible instruments can be a challenging task. Multiple provisions and attributes of the underlying security need to be considered and modeled. Join Mark Zyla, Rajesh C. Khairajani, and ...
Total Beta—Where Does It Fit in Valuation Theory
The valuation of any company by the discounted cash flow method is divided into two different tasks: forecasting cash flows and discounting these same cash flows using the appropriate discount rate. The latter requires a good understanding of the risks faced by the subject company's cash flows to be able to determine the appropriate risk premia to compensate a typical willing buyer and satisfy a typical willing seller. There is a high level of ambiguity ...
Journal of Business Valuation 2020 Edition
From the CBV Institute ...
Vinoskey reply brief refutes DOL’s stock value and control claims
Argument continues in the contentious Vinoskey ESOP litigation, which is now in the 4th Circuit where the remaining defendant, Adam Vinoskey, has appealed the district court’s liability and damages findings.
BVU News and Trends December 2020
A monthly roundup of key developments of interest to business valuation experts.
Stark Differences from the Inside Out: Two Key Responders Discuss The Final Stark Regulations for FMV and Commercial Reasonableness
The Stark regulations have been updated. What has changed and how does it impact value? Mark Dietrich and Tim Smith were two major contributors of public comments to the Centers for Medicare & Medicaid (CMS) for the updated Stark regulations with over 100 pages of newly written material that was influential in the development of the final regulatory definitions for FMV and commercial reasonableness. In addition, they included over a dozen chapters from the BVR/AHLA ...
In re Kinser Group LLC
In § 506(a) hotel valuations, bankruptcy court finds creditor’s experienced expert premised appraisals on “fundamentally flawed” base assumption that hotels would be sold on the valuation date, where debtor’s plan said debtor would retain and operate hotels; court said replacement value applied.
Expert’s Failure to Review Debtor’s Reorganization Plan Results in ‘Defective’ Hotel Appraisals
In § 506(a) hotel valuations, bankruptcy court finds creditor’s experienced expert premised appraisals on “fundamentally flawed” base assumption that hotels would be sold on the valuation date, where debtor’s plan said debtor would retain and operate hotels; court said replacement value applied.
Physician Compensation and Valuation: Administering Top Tier Treatment
Assessing physician compensation is a critical component in valuing a physician practice. Many external factors, including the COVID-19 pandemic and proposed changes to the Medicare Physician Fee Schedule, have had and will continue to have significant impacts on physician compensation and associated practice valuations. In this discussion, Derek Long and Katie Culver will explain how physician compensation is analyzed in the context of valuation along with various factors that can influence it, both internally and ...
Parties’ agreement complicates spousal support calculation in S corp context
Instead of facilitating a resolution, a separation agreement between the divorcing spouses led to a protracted lawsuit.
DOL appellate brief pushes back in Vinoskey ESOP litigation
Neither side is letting up in the contentious Vinoskey ESOP litigation that has now moved to the 4th Circuit U.S. Court of Appeals.
In tax refund case, expert identifies only viable method to value stock in ‘severely distressed’ private company
The taxpayer sued the federal government for a refund, arguing she had overpaid income taxes on stock she had received as part of settling a lawsuit against her former employer.
Prospects grow for valuing promissory notes, says Mercer
There is an increasing number of opportunities for analysts in valuing promissory notes, says Chris Mercer (Mercer Capital) during the recent AICPA Forensic & Valuation Services Conference.
Finkel v. Palm Park, Inc.
In LLC member dispute, court faces “conundrum” where fair value buyout seeks to avoid LLC’s dissolution and court leans on expert’s FMV valuation using net asset value approach premised on “orderly liquidation”; court notes FMV is based on hypothetical actors and transaction, not specific parties.
Court’s Fair Value Determination Leans Heavily on Expert’s Fair Market Valuation Premised on Liquidation
In LLC member dispute, court faces “conundrum” where fair value buyout seeks to avoid LLC’s dissolution and court leans on expert’s FMV valuation using net asset value approach premised on “orderly liquidation”; court notes FMV is based on hypothetical actors and transaction, not specific parties.
ESOPs: good for employees but facing an uncertain future
A recent article in the New York Times extols the virtues of employee ownership through employee stock ownership plans (ESOPs). And trade groups for employee-owned businesses have noted bipartisan Congressional support for ESOPs. But ESOP experts (trustees and appraisers) worry that the Department of Labor’s antagonistic attitude toward ESOP transactions, validated by key victories in court, has stymied ESOP formation.
ESOPs: good for employees but facing an uncertain future
A recent article in the New York Times extols the virtues of employee ownership through employee stock ownership plans (ESOPs).
Lysengen v. Argent Trust Co.
ESOP plaintiff’s proposed class action against trustee and selling shareholders survives motion to dismiss; court says complaint gave enough facts to support claims of overpayment and breach of fiduciary duty; defendant must show disputed transaction falls into adequate consideration exemption.
BVU News and Trends October 2020
A monthly roundup of key developments of interest to business valuation experts.
Family Matters: Standard of Value, DLOM/DLOC Discounts and Drama in BV
A buried body, sex surrogates, and family-owned business create a dramatic background for a recent court case impacting valuation. With complex minority discounts, this case kicks off a compelling discussion of key issues in family law. Experts Stacey Udell, Neil Beaton, and Ron Seigneur tackle these thorny issues with clarity and comedy. Get treated to the tricks and tips you’ll want when your next family-owned business engagement rings your doorbell.
Court of Chancery sanctions use of asset approach in complex appraisal case
A low-profile appraisal case in front of the Delaware Court of Chancery raised important valuation questions, including how the court should determine the fair value of a nonoperating entity and how it should deal with the value of claims both parties brought on behalf of the company prior to the contested merger.
ESOP Plaintiff’s Proposed Class Action Alleging Overpayment Survives Motion to Dismiss
ESOP plaintiff’s proposed class action against trustee and selling shareholders survives motion to dismiss; court says complaint gave enough facts to support claims of overpayment and breach of fiduciary duty; defendant must show disputed transaction falls into adequate consideration exemption.
Key Tennessee appeals court ruling finds tax affecting ‘relevant’ to fair value buyout
In a Tennessee buyout dispute involving a limited liability corporation organized as an S corporation, the parties disagreed over whether it was appropriate to tax affect in calculating the fair value of the terminated member’s interest.