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Pre-IPO Revival: Up your DLOM Game in 2020

Pre-IPO data are very useful for valuators. Join Brian Pearson, creator of the Valuation Advisors Lack of Marketability Discount Study, to learn how to calculate discounts using different types of data (stock, options, and convertible preferred stock) and learn why the abundance of pre-IPO data is useful versus smaller samples of discount data. Brian will lead a discussion of prior criticisms of some sources of data and address those criticisms as they pertain to Valuation ...

Impact of Contractual Rights on Preferred Stock Valuations in Delaware

The rights and the value of preferred stock have been the subject of several Delaware court decisions. These decisions are particularly significant for understanding the importance of contractual rights as the defining attribute affecting the valuation of preferred stock. Directors' fiduciary duties are primarily to common shareholders, while obligations to preferred shareholders are primarily contractual. Preferred stocks' contractual rights, as interpreted in these decisions, directly affects the value of the preferred and the common. When ...

Liquidity and Private Placement Discounts in the TARP Preferred Stock Auctions

The liquidity discounts in the first 72 Troubled Asset Relief Program (TARP) auctions of preferred stock averaged 9.6%. The liquidity discounts were significantly lower for publicly held banks and banks that had never missed a bailout dividend. In addition, auction yields were significantly higher, 152 basis points higher, in private placements open only to accredited investors. This paper develops two different valuation frameworks based on accounting: call report data to estimate the yields and present ...

Shiftan v. Morgan Joseph Holdings, Inc.

In merger-related appraisal action Del. Chancery agrees with petitioning shareholders that fair value assessment of company as going concern must include the redemption value provided for in the original Certificate of Incorporation.

Redemptions of ESOP Shares Were Deductible Dividends

The question of whether the distributions to plan participants are deductible dividends depends on who owned the convertible preferred stock when the redemptions took place.

Boise Cascade Corp. v. United States

Issue is whether distributions to ESOP plan participants are deductible dividends.

Court uses net asset value to value service business

The issues in this case marital dissolution case were (1) whether the trial court erred in determining the value of Language Learning Enterprises, Inc. (LLE), and (2) whether the trial court erred in its award of the wife's interest in LLE.

Emory responds to Dr. Bajaj: miniscule adjustments warranted

In this article, John Emory and his colleagues address Dr. Bajaj's criticism of their pre-IPO discount for lack of marketability studies ( BVU , March 2002, pp. 12-14). The result is no adjustment to ...

Diamond v. Diamond

Issues were whether the trial court erred in determining the value of Language Learning Enterprises, Inc. and in its award of the wife's interest in the company.

The value of marketability as illustrated in IPOs: May 1997 - December 2000

A critical aspect in determining the fair market value of closely held securities is the discount for lack of marketability. The term discount for lack of marketability is a general term in business v ...

2000 marketability discounts as reflected in initial public offerings

This interview by Alina Niculita is based on the Valuation Advisors Study of pre-IPO transactions for the year 2000. The complete article describing the study is available on BVLibrary.com ...

The value of marketability as illustrated in dot.com IPOs: May 1997-March 2000

This study is an outgrowth of the eight pre-IPO discount studies published by John D. Emory, Sr. covering 1980-1997. The complete results of this study, with exhibits and expanded text analysis ...

Preferred Limited Partnerships: The FLP's of Choice?

n Preferred Limited Partnerships: The FLP's of Choice? Hatcher, Milford B., Jr., and Gregory E. Kniesel . Valuation Strategies , July/August 1999, pp. 12-33. This article presents a rather ...

What you should know about PLPs

"Preferred Limited Partnerships: The FLP's of Choice?" Hatcher, Jr., Milford B. and Gregory E. Kniesel , Valuation Strategies , July/August 1999, pp. 12-33. This article presents a rather comprehens ...

Court Values Stock at Subsequent Sale Price

Although there are other assets at issue in this case, our review is limited to the value of 1,533.482 shares of a certain class of Sterling Holding Co. preferred stock as of the alternate estate valuation date, Sept. 18, 1992.

Estate of Trompeter v. Commissioner (I)

Issue was the fair market value of 1,533.482 shares of a certain class of Sterling Holding Co. preferred stock.

Reader inquires about different methods for valuing preferred stock

The newsletter is excellent.  It continues to provide essential information on a timely basis.  The interviews with various financial and legal professionals outside the business v ...

Estate of D'Ambrosio v. Commissioner

Issue is whether entire fee simple value of stock was part of gross estate even though the decedent had sold her remainder interest in the stock for its fair market value.

Remainder Interest Included in Gross Estate at FMV

The 3rd Circuit reversed the Tax Court and concluded that the decedent received adequate consideration under IRC sec. 2036 when she exchanged her stock for an annuity.

Charges of Breach of Fiduciary Duty, Fraud, and Misrepresentation Part of Company Stock Exchange

Plaintiffs charge breach of fiduciary duty, fraud, and negligent misrepresentations in connection with their exchange of Genesco Inc. Serial Preferred Stock for Genesco common stock Aug. 1, 1988.

Miller v. Genesco

At issue is a claim by the plaintiff stockholders of breach of fiduciary duty and fraud by the defendant company during an exchange of preferred stock to common stock.

Hutchens Non-Marital Trust v. Commissioner

At issue is the valuation of the stock of a family-owned corporation for estate gift tax purposes.

Hutchens v. Commissioner

The marketability discount issue in this case arose in connection with the question of whether the common stock decedent and his wife surrendered in a recapitalization of their family-owned corporation was worth more than the preferred stock they received, thus resulting in taxable gifts.

Estate of Yeager v. Commissioner

Issues were fair market value of common and Class B preferred stock and whether certain corporate stock was the separate property of the decedent's surviving spouse.

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