BV News and Trends May 2024
A monthly roundup of key developments of interest to business valuation experts.
New issue of ASA’s BV Review added to BVResearch Pro
Among many other resources, the BVResearch Pro platform contains the full archive of the Business Valuation Review going back to 1982.
Midyear or End of Year Present Value Factors? Clues from Valuation in Discrete and Continuous Time
This article addresses whether appraisers should be using midyear or end-of-year present value factors. Although this is a topic that other authors and I have addressed, this article has some unique and novel approaches to the topic. The mathematics in this article accounts for cash flow growth within and between years rather than between years only, as others have modeled. We model in both discrete and continuous time, with discrete time in multiple time frames ...
Delaware Chancery Court Cites Differences in Cash-Flow Assumptions as Cause for Large Discrepancy in Value
In this appraisal action to determine fair value, petitioner Ramcell Inc. exercised its appraisal rights in asking for a statutory appraisal of the value of its 155 shares of Jackson Cellular Telephone Co. Inc. The respondent, Alltel Corp. (dba Verizon Wireless), had converted the 155 shares at a value of $2,963 per share. “Respondent’s expert opines that Jackson’s per-share value was $5,690.92 at the time of the merger. Petitioner’s expert has offered two appraisal ranges, opining that, at the high end, Jackson’s per-share value was $36,016 on the merger date.” Both parties agreed that the DCF method should be the sole method for determining the value. The Delaware Chancery Court, using that method, determined the fair value of each share at $11,464.57. The court noted that the disparity in the parties’ valuations was due to disagreements as to the inputs to the DCF model and how they should be calculated.
Ramcell, Inc. v. Alltel Corp.
In this appraisal action to determine fair value, petitioner Ramcell Inc. exercised its appraisal rights in asking for a statutory appraisal of the value of its 155 shares of Jackson Cellular Telephone Co. Inc. The respondent, Alltel Corp. (dba Verizon Wireless), had converted the 155 shares at a value of $2,963 per share. “Respondent’s expert opines that Jackson’s per-share value was $5,690.92 at the time of the merger. Petitioner’s expert has offered two appraisal ranges, opining that, at the high end, Jackson’s per-share value was $36,016 on the merger date.” Both parties agreed that the DCF method should be the sole method for determining the value. The Delaware Chancery Court, using that method, determined the fair value of each share at $11,464.57. The court noted that the disparity in the parties’ valuations was due to disagreements as to the inputs to the DCF model and how they should be calculated.
Radiologix, Inc. v. Radiology & Nuclear Medicine, LLC
Court admits expert calculation that determines one set of damages for two related plaintiff entities and that relies on data from nonparty parent entity; court finds calculation need not precisely track corporate structure to meet Daubert requirements.
Under Daubert, Damages Calculation Need Not Replicate Corporate Structure
Court admits expert calculation that determines one set of damages for two related plaintiff entities and that relies on data from nonparty parent entity; court finds calculation need not precisely track corporate structure to meet Daubert requirements.
Green v. Polyester Fibers, LLC
Mississippi law requires discounting to present value, court says; court affirms its earlier exclusion of expert’s future lost compensation forecast because calculation was based on “total offset” method, which is disfavored in Mississippi.
Wrong Methodology Gets Lost Compensation Forecast Excluded
Mississippi law requires discounting to present value, court says; court affirms its earlier exclusion of expert’s future lost compensation forecast because calculation was based on “total offset” method, which is disfavored in Mississippi.
Art Is Like Any Other Business: Value Must Include Owner’s Reasonable Salary
In valuing inventory original artwork, must divorce court assign reasonable salary to spouse-owner?
Expert Struck in Mid-Damages Calculation
Michigan court strikes expert testimony on present value discount rate calculation of lost profits, based on local state law regarding jury instructions ...
In re Marriage of Haefele
In valuing inventory original artwork, must divorce court assign reasonable salary to spouse-owner?
Diesel Machinery Inc. v. B.R. Lee Industries, Inc.
Michigan court strikes expert testimony on present value discount rate calculation of lost profits, based on local state law regarding jury instructions ...
Accounting Expert’s Lost Profits Analysis Accepted Over Economist’s Estimate
The Delaware Court of Chancery calculated lost profits arising from the breach of a contract.
Honeywell International Inc., et al. v. Air Products & Chemicals, Inc.
The Delaware Court of Chancery calculated lost profits arising from the breach of a contract.
Spouse not entitled to future income
The issue in this case was whether the trial court erred in valuing husband's cardiology practice.
Eliz v. Eliz
The issue in this case was whether the trial court erred in valuing husband's cardiology practice.
Understanding the income valuation approach – a primer for judges
In determining the price to pay for a company, a buyer of a business ultimately looks to the return he will receive on his investment. That return might come in the form of annual dividends ...
A lawyer's guide to asset-based approaches to business valuation
Generally, asset-based approaches to valuation deal with a simplified view of the net assets and liabilities of a corporation. Fair market value is determined under asset-based approaches by using the ...
Estate of Hoffman v. Commissioner
At issue is the fair market value of property interests held by decedent at the time of her death.
Appraisers Apply Myriad of Valuation Techniques to Various Estate Holdings
Marcia Hoffman's (decedent) estate held a 27.5% interest in Clubside Partnership, which was family owned.
Milteer v. Milteer
At issue is the valuation of wife's nurses license.
Marital property includes nursing license and pensions
The issues raised in this appeal of the marital property distribution concerned the valuations of the wife's nursing license and the husband's pension.
In re the Marriage of Antuna
Issues were whether trial court erred in admitting testimony of wife's expert, valuing wife's medical practice, and failing to award an equitable share of wife's medical practice to husband.
No double dipping where child support, maintenance, and business value based on same income stream,
Several issues were raised in this marital dissolution appeal related to the valuation of wife's medical practice.