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Global BVU News and Trends October 2020

Business valuation news from a global perspective.

Control Discounts and Premiums - What is Old and What is New

Where do they come from? Do they even exist? Should I fear using them? No, this October event doesn’t delve into the supernatural but rather attempts to demystify the methods and resources available to quantify control discounts and/or premiums. Join Jim Ewart and Jim Alerding to learn what is new, what is old, and what matters. Learn the sources, context, and usefulness of control premiums and discounts, and the best practices for determining what they ...

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.

BVResearch Pro Tackles Tricky Search for Guidance on a 50% Interest

During a webinar, an appraiser challenges BVR’s BVResearchPro platform to find court cases, articles, or any other material that discusses a marketability discount for a 50% ownership interest in a private company.

‘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.

Indiana and South Carolina courts issue key discount rulings

The Indiana Court of Appeals and the South Carolina Supreme Court recently issued noteworthy rulings on the appropriateness of discounts in valuing minority interests. The contexts in which the issue arose were different, but both situations amounted to a compelled buyback of shares.

Nelson v. Commissioner

In gift tax case, Tax Court finds donor transferred percentages in limited liability company rather than fixed dollar amounts based on language in transfer instruments; further, where transferred minority interests include elements of control, minority discount should be reduced, not eliminated.

Court Says Reduced Minority Discount Appropriate Where Minority Interest Has Elements of Control

In gift tax case, Tax Court finds donor transferred percentages in limited liability company rather than fixed dollar amounts based on language in transfer instruments; further, where transferred minority interests include elements of control, minority discount should be reduced, not eliminated.

South Carolina Supreme Court weighs in on use of discounts in divorce valuations

In a crucial decision on the use of discounts when valuing a spouse’s minority interest in a closely held business, a majority of the South Carolina Supreme Court rejected a bright-line rule, noting it would limit the flexibility family courts must have in apportioning marital assets.

Discounts inappropriate in valuing minority interest in mandatory buyback, appeals court rules

When a minority shareholder in an Indiana company was terminated as a director and officer, a dispute arose over whether, under a buyback agreement, the use of discounts for lack of control and marketability was permissible in valuing his shares.

Clark v. Clark

On use of marketability and minority discount in valuing wife’s minority interest in husband’s company, state Supreme Court rejects bright-line rule, noting importance of case-by-case analysis and giving trial court flexibility in apportioning assets; fair market value standard drives valuation.

South Carolina Supreme Court Rejects Categorical Approach to Discounts in Divorce Valuations

On use of marketability and minority discount in valuing wife’s minority interest in husband’s company, state Supreme Court rejects bright-line rule, noting importance of case-by-case analysis and giving trial court flexibility in apportioning assets; fair market value standard drives valuation.

Robinson v. Langenbach

State high court upholds trial court’s use of DLOM and minority discount in buyout of minority interest resulting from shareholder oppression; court says there is no “fixed set of factors” trial court must consider for fair value calculation; “context is crucial” and here justified discounts.

High Court Says Context Supports Use of Discounts in Buyout From Shareholder Oppression

State high court upholds trial court’s use of DLOM and minority discount in buyout of minority interest resulting from shareholder oppression; court says there is no “fixed set of factors” trial court must consider for fair value calculation; “context is crucial” and here justified discounts.

Hartman v. BigInch Fabricators & Construction Holding Co., Inc.

In dispute about valuation of terminated shareholder’s minority interest, appeals court finds the trial court erred when it allowed discounts for lack of control and marketability; under controlling case law, discounts are inappropriate where the buyback is mandatory and to the controlling party.

In Mandatory Buyback, Indiana Appeals Court Disallows Use of Discounts

In dispute about valuation of terminated shareholder’s minority interest, appeals court finds the trial court erred when it allowed discounts for lack of control and marketability; under controlling case law, discounts are inappropriate where the buyback is mandatory and to the controlling party.

Best Practices – Thought Leadership in Valuation, Damages, and Transfer Price Analysis

March 2020 Hardcover

Robert F. Reilly, Robert P. Schweihs

Best Practicesincludes more than 1,200 pages of thought leadership on a wide range of topics, including the valuation of private company securities and intangible assets, valuation for property tax purposes, valuation for ESOPs, fair value measurement for financial accounting purposes, transfer price analysis, and economic damages measurement. Learn more >>

Global BVU News and Trends January 2020

Business valuation news from a global perspective.

Do alliances and partnerships increase value?

Most business valuation experts accept the fact that business partnerships (for IP or shared revenue opportunities) add to the value of a pool of assets.

Appeals court upholds Lund buyout ruling and fair value determination

A protracted Minnesota buyout dispute involving the heirs to a local grocery store empire, Lunds & Byerlys, may have reached the end following a recent ruling from the state appeals court. The reviewing court upheld the trial court’s decision to grant the minority shareholder’s request for a buyout as well as the court's fair value determination.

Appeals Court Upholds Grocery Store Buyout Ruling and Fair Value Determination

Appeals court upholds district court’s buyout order of minority shareholder’s interests in related family businesses (grocery store chain) as well as district court’s fair value determination; district court’s valuation “falls squarely” between trial experts’ valuations, appeals court says.

Lund v. Lund (II)

Appeals court upholds district court’s buyout order of minority shareholder’s interests in related family businesses (grocery store chain) as well as district court’s fair value determination; district court’s valuation “falls squarely” between trial experts’ valuations, appeals court says.

Courts are alert to valuations unmoored from the facts

Perhaps experts feel pressure from the hiring attorney or the client, perhaps they are unable to access key documents or information, or perhaps they simply lack valuation and litigation experience.

Expert’s Detailed Risk Analysis Bolsters Use of Deep Discount in Law Firm Valuation

In buyout dispute over law firm interest, court credits firm’s expert, noting his extensive relevant experience, his taking care to value interest under fair market value standard, as required by the partnership agreement, and his detailed risk analysis to support a deep discount.

Fredericks Peebles & Morgan LLP v. Assam

In buyout dispute over law firm interest, court credits firm’s expert, noting his extensive relevant experience, his taking care to value interest under fair market value standard, as required by the partnership agreement, and his detailed risk analysis to support a deep discount.

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