Quantifying DLOMs for Minority and Controlling Interests
The discount for lack of marketability is one of the largest and most important adjustments made in the valuation of a privately held business. It is crucial to understand that an investor purchases the privately held interest at a discount to increase the rate of return on the investment. This increased rate of return offsets the additional risk the lack of marketability of the investment causes. This webinar will discuss how to use this concept ...
Another case of lopsided valuation experts
A Minnesota divorce case is an example of why judges can get the perception that valuation experts are hired guns.
Tennebaum v. Deshpande
In this Minnesota appeal of a marital dissolution decree, the district court received valuations from experts representing both parties and determined the value of the husband’s business interest in an asset management company. The husband appealed that value. The district court had considered matters of methodology as well as personal goodwill. The court of appeals found that the district court did not abuse its discretion and affirmed the judgment of the district court.
Valuation of Husband’s Business Interest Considers Credibility, Personal Goodwill, and Other Issues
In this Minnesota appeal of a marital dissolution decree, the district court received valuations from experts representing both parties and determined the value of the husband’s business interest in an asset management company. The husband appealed that value. The district court had considered matters of methodology as well as personal goodwill. The court of appeals found that the district court did not abuse its discretion and affirmed the judgment of the district court.
Business Combinations and Fair Value for Financial Reporting
Are you confused by business combinations? Join William Kennedy for this engaging session covering GAAP fair value standards and their application in business combinations. Hear a discussion of the nuances of the GAAP fair value standard and history of how it was developed as part of the GAAP-IFRS convergence project. Also learn how the valuation approaches and methods used in fair value assessment differ from valuation approaches used in a fair market value appraisal.
Valuing Enterprise Cash Flows
The integrated theory of business valuation provides a conceptual framework for disciplined analysis of valuation questions. Too often, valuation analysts are tempted to view individual components of a valuation assignment on a piecemeal basis. Adhering to the integrated theory helps valuation analysts develop base valuation conclusions, discounts, and premiums that are rooted in a shared perspective of the subject company and the subject ownership interest. In Part 1 of the series, Chris Mercer and Travis ...
NICE Value! How to Deploy the Non-Marketable Investment Company Evaluation Method
When it comes to valuing minority interests in family investment entities such as family limited partnerships, business valuation professionals have not often used the income approach. However, in three recent Tax Court cases, the income approach was prominently featured, and, in one case, it was clearly the deciding factor in the court’s decision. Join William Frazier to learn about the nonmarketable investment company evaluation (NICE) method. Learn its origins, what it doesn’t replace, and how ...
Business Valuation OIV Journal Fall 2019
Business Valuation OIV Journal has been created by Organismo Italiano di Valutazione (OIV), the Italian Valuation Standard Setter, to provide a forum for discussion and to foster cultural progress in the field of business valuation. In this issue, articles include "Roundtable: 10 Big Issues in Business Valuation"; "The Limits of Accounting Rates of Return and the Calibration Trap in Applying Accounting-Based Models in Modern Business Valuation Practice"; and "Connecting Economic Value to Company Strategy: Critical Issues and New Perspectives."
Failure to explain inputs gets expert excluded under Daubert
If more proof is necessary to show that courts across all legal fields dive deep into the details of valuation testimony, a recent damages case that arose in the context of a condemnation proceeding should do the trick.
Private Market Equity Prices and Transactions Costs: Generalized IPCPL Theory and Private Market Empirical Tests
Implied private company pricing line (IPCPL) theory is based on the fundamental assumption—taken from modern asset pricing theory—that two or more equity interests that have the same risk exposures and risk sensitivities must have the same expected rates of return. IPCPL theory, however, includes the additional assumption that transaction costs generally differ across equity interests and markets, and such differences influence expected rates of return. This study generalizes IPCPL theory to explain and predict the ...
Expert’s Failure to Explain Basis for Compensation Analysis Renders Testimony Inadmissible
In condemnation case requiring fair market value analysis to determine compensation due to landowners, court excludes defense expert testimony, citing failure to follow mandated methodology and standard of value; court calls aspects of loss calculation based on income approach “disturbing.”
Rover Pipeline LLC v. 10.55 Acres
In condemnation case requiring fair market value analysis to determine compensation due to landowners, court excludes defense expert testimony, citing failure to follow mandated methodology and standard of value; court calls aspects of loss calculation based on income approach “disturbing.”
Chancery’s fusion valuation triggers remand and some words of wisdom by Del. Supreme Court
The Delaware Supreme Court recently overturned a 2016 ruling by the Delaware Court of Chancery that arrived at fair value by weighting the results of three valuation techniques equally. The high court's Chief Justice Strine, who once headed the Chancery, found this approach was problematic and used the decision to provide valuation advice to his successor, Chancellor Bouchard, who had overseen the appraisal proceeding.
Why Del. Chancery rejects merger price in 'Dell' statutory appraisal action
It decided to give no weight to the final merger price—$13.75 per share, and a special $0.13 dividend issued to all shareholders—but rely exclusively on its own post-transaction DCF analysis to determine the fair value of the company. In so doing, the court deviated from a number of Chancery decisions—several issued in 2015—that found the deal price was the most reliable indicator of the company’s fair value.