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Court figures fair value of startup biotech for dissenters

In a dissenting shareholder case in a federal district court in Georgia, neither the Black-Scholes method nor the prior transactions method convinced a court of the value of a startup biotech company.

Abeome Corp., Inc. v. Stevens

The parties did not agree on a fair value of the shares in a dissenting shareholder suit. The court, using information in evidence, including expert witness testimony from both parties’ experts, determined the fair value.

U.S. District Court Determines Fair Value of Shares

The parties did not agree on a fair value of the shares in a dissenting shareholder suit. The court, using information in evidence, including expert witness testimony from both parties’ experts, determined the fair value.

The Valuation of Special Share Classes in the United Kingdom

A special analysis of a recent exposure draft concerning shares to employees in the United Kingdom (England and Wales, Scotland, and Northern Ireland ...

In re Navidea Biopharmaceuticals Litig.

A pharmaceuticals company sued its former CEO for, among other things, breach of contract and for a declaratory judgment establishing the contractual rights and obligations of the parties. This resulted in counterclaims by the former CEO, Michael Goldberg. Goldberg submitted for testimony of damages Terry Lee Orr, CPA. In this matter, the company sought to exclude Orr’s testimony and, absent his exclusion, to present their own expert, William F. Murray, CPA, as a rebuttal expert. Goldberg sought to exclude the testimony of Murray. The court excluded portions of Orr’s testimony and denied the exclusion of Murray as a rebuttal expert.

U.S. District Court Partially Excludes Witness in Securities Value Case and Allows Rebuttal Witness

A pharmaceuticals company sued its former CEO for, among other things, breach of contract and for a declaratory judgment establishing the contractual rights and obligations of the parties. This resulted in counterclaims by the former CEO, Michael Goldberg. Goldberg submitted for testimony of damages Terry Lee Orr, CPA. In this matter, the company sought to exclude Orr’s testimony and, absent his exclusion, to present their own expert, William F. Murray, CPA, as a rebuttal expert. Goldberg sought to exclude the testimony of Murray. The court excluded portions of Orr’s testimony and denied the exclusion of Murray as a rebuttal expert.

Estate attorney sued over alleged undervaluation

The matriarch of a family business in Hawaii had four children, two of which were involved in the business.

Sullivan v. Loden

In this malpractice case against an estate attorney, the attorney was denied a summary judgment. The primary issue related to the attorney’s valuation of stock of a family business that was gifted to two of the four children of the decedent. While an “equalization payment” was made to each of the two remaining children, one of these two sued the attorney for both breach of fiduciary duty and for undervaluing the stock gifted, resulting in an underpaid equalization payment.

Estate Attorney Is Denied a Summary Judgment for Alleged Incorrect Valuation of Gifts of Stock—Malpractice Case Proceeds

In this malpractice case against an estate attorney, the attorney was denied a summary judgment. The primary issue related to the attorney’s valuation of stock of a family business that was gifted to two of the four children of the decedent. While an “equalization payment” was made to each of the two remaining children, one of these two sued the attorney for both breach of fiduciary duty and for undervaluing the stock gifted, resulting in an underpaid equalization payment.

Walsh v. Bowers

A district court has ruled “decisively” against the Department of Labor (DOL) in an ESOP valuation case, stressing that the DOL failed to follow standard valuation practices.

District Court Rules ‘Decisively’ Against the DOL in an ESOP Overvaluation Case

The Department of Labor sued the defendants, which included two individual owners, Bowers & Kubota Consulting Inc. and the Bowers & Kubota ESOP, alleging that the defendants had violated ERISA laws by manipulating data to induce the ESOP to pay $40 million for the shares of the individual shareholders that the DOL claimed was in excess of the fair market value of the shares. After extensive testimony of valuation experts and analysis of the facts of the case, the court determined that no ERISA violations have been established.

New DOL process agreement confronts control issue in ESOP valuations

The Department of Labor recently settled ESOP litigation with the trustee Farmers National Bank of Danville (FNB).

DOL Processing Agreement Contains Stringent Rules on Controlling Interest Transactions, Indemnification

Under new processing agreement between DOL and specific ESOP trustee, trustee is bound by strict rules on how to handle controlling-interest acquisitions and indemnification issues; trustee must ensure ESOP plan acquires a series of specified rights before approving payment of a control premium.

Scalia v. Farmers National Bank of Danville & Weddle Bros. Const. Co.

Under new processing agreement between DOL and specific ESOP trustee, trustee is bound by strict rules on how to handle controlling-interest acquisitions and indemnification issues; trustee must ensure ESOP plan acquires a series of specified rights before approving payment of a control premium.

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 ...

Shareholder Agreement Sparks Suit Over Discount Use in FMV Calculation

Probate court says expert and other testimony aiding in interpretation of ambiguous shareholder agreement shows that fair market value determination of decedent’s minority interest allowed for use of discounts for lack of marketability and control.

Shareholder Agreement Sparks Suit Over Discount Use in FMV Calculation

Appeals court affirms probate court’s ruling that ambiguous shareholder agreement requiring determination of fair market value of decedent’s minority interest in closely held companies accommodated use of discounts for lack of marketability and control.

In re Estate of Bittner (Bittner II)

Appeals court affirms probate court’s ruling that ambiguous shareholder agreement requiring determination of fair market value of decedent’s minority interest in closely held companies accommodated use of discounts for lack of marketability and control.

Bankruptcy Court Accepts Rationale for Tax Affecting

In a fraudulent transfer case involving S corp, court says valuation should reflect that buyers of S corps would experience a reduction in the value of the corporations' earnings because of the need to pay personal income taxes on those earnings.

Bank of America, N.A. v. Veluchamy (In re Veluchamy)

In a fraudulent transfer case involving S corp, court says valuation should reflect that buyers of S corps would experience a reduction in the value of the corporations' earnings because of the need to pay personal income taxes on those earnings.

Estate Valuation Can’t Ignore Historical Data, Tax Court Says

Tax court disapproves of estate’s “conflicting expert reports” as to value of decedent’s 100% interest in a C corp. but ultimately adopts estate’s DCF valuation, finding its treatment of personal goodwill is more credible than the IRS’s approach.

In re Estate of Bittner (Bittner I)

Probate court says expert and other testimony aiding in interpretation of ambiguous shareholder agreement shows that fair market value determination of decedent’s minority interest allowed for use of discounts for lack of marketability and control.

Estate of Adell v. Commissioner

Tax court disapproves of estate’s “conflicting expert reports” as to value of decedent’s 100% interest in a C corp. but ultimately adopts estate’s DCF valuation, finding its treatment of personal goodwill is more credible than the IRS’s approach.

Key person discount central issue in NY trial court

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