BV News and Trends March 2024
A monthly roundup of key developments of interest to business valuation experts.
BV News and Trends February 2024
A monthly roundup of key developments of interest to business valuation experts.
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.
Valuation of business hit by COVID-19 in recent divorce case
If you haven’t done so already, sooner or later you will value a business affected by COVID-19.
Delay in divorce decree does not change valuation date
In a Montana divorce case, the husband became an owner of a business right before marriage.
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.
Dawson v. Dawson
The court of appeals, in an Arizona divorce case, affirmed the decision of the Superior Court to accept the wife’s expert’s value of the husband’s business. The wife’s expert used a three-year look back average of cash flows, while the husband’s expert utilized the most current year’s cash flow.
Court Chooses Three-Year Average Cash Flow Over Single to Determine Value of Husband’s Business—Appellate Court Affirms
The court of appeals, in an Arizona divorce case, affirmed the decision of the Superior Court to accept the wife’s expert’s value of the husband’s business. The wife’s expert used a three-year look back average of cash flows, while the husband’s expert utilized the most current year’s cash flow.
In re Marriage of Remitz
In this divorce case, the Montana Supreme Court reversed the trial court’s use of the date of dissolution, May 2017, as the valuation date, reversed the trial court’s revaluation of the husband’s business, and reverted to the value determined to the trial date in 2014. The wife had no involvement in the business subsequent to the 2014 trial date.
Montana Supreme Court Holds Proper Date of Business Value Is the Date of Trial (2014), Not the Date of Dissolution (2017)
In this divorce case, the Montana Supreme Court reversed the trial court’s use of the date of dissolution, May 2017, as the valuation date, reversed the trial court’s revaluation of the husband’s business, and reverted to the value determined to the trial date in 2014. The wife had no involvement in the business subsequent to the 2014 trial date.
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Divorce valuation is too little, too late
This is another in a rash of cases where one side either did not engage a valuation expert or did not use the expert to the best advantage.
‘Fawning terms’ help sink valuation
In an Iowa divorce case, the appellate court affirmed the trial court’s decision to reject the valuation of the husband’s expert for one of his three businesses.
Pemberton v. Pemberton
In this complex Minnesota divorce case, the appellate court was taxed with multiple issues to decide. Among those issues was the value of the two businesses the husband owned in whole or part. The district court determined values based on the wife’s expert’s valuation report. The husband’s expert was not engaged to give a valuation opinion. The appellate court did not take the husband’s expert’s criticisms and comment on value into account. The appellate court also found no error in the district court dividing the combined 2020 tax liabilities for the parties in two and allocating half to each party, nor in its decision not to allocate the husband’s excess tax paid as a result of filing separately in 2018 and 2019.
Appellate Court Affirms Value of Businesses and Tax Liability Issue
In this complex Minnesota divorce case, the appellate court was taxed with multiple issues to decide. Among those issues was the value of the two businesses the husband owned in whole or part. The district court determined values based on the wife’s expert’s valuation report. The husband’s expert was not engaged to give a valuation opinion. The appellate court did not take the husband’s expert’s criticisms and comment on value into account. The appellate court also found no error in the district court dividing the combined 2020 tax liabilities for the parties in two and allocating half to each party, nor in its decision not to allocate the husband’s excess tax paid as a result of filing separately in 2018 and 2019.
Husband vs. valuation expert, court splits the difference
In an Iowa divorce case, the wife engaged a CPA and valuation analyst to value the husband’s construction company, and he concluded a value of $1,020,597.
In re Marriage of Marasco
This case was an appeal of an Iowa marital dissolution decree. The husband on appeal argued the value the wife’s expert determined was too high and should not have been relied on. The appellate court noted that part of the reason the trial court used the wife’s expert’s appraisal was that the business was able to obtain a $10 million loan during the time of the valuation. Additionally, the appellate court affirmed that the entire value of the business was community property.
Iowa Court of Appeals Affirms Value of Husband’s Business Determined by Wife’s Expert and Includes Total Value as Marital Property
This case was an appeal of an Iowa marital dissolution decree. The husband on appeal argued the value the wife’s expert determined was too high and should not have been relied on. The appellate court noted that part of the reason the trial court used the wife’s expert’s appraisal was that the business was able to obtain a $10 million loan during the time of the valuation. Additionally, the appellate court affirmed that the entire value of the business was community property.
New case involves dispute over company-specific risk
In a Minnesota shareholder buyout matter, the two opposing valuation experts disagreed over the risk associated with customer concentration.
In re Marriage of Bainbridge
In this Iowa appellate case regarding a marital dissolution, the appellate court affirmed the decision of the trial court judge as to the value of the husband’s construction company. The wife’s expert used a valuation date of Dec. 31, 2020, versus trial date of December 2021 because of availability of information on the business.
Value of Husband’s Business Affirmed Based on Trial Judge’s Reasonable Discretion
In this Iowa appellate case regarding a marital dissolution, the appellate court affirmed the decision of the trial court judge as to the value of the husband’s construction company. The wife’s expert used a valuation date of Dec. 31, 2020, versus trial date of December 2021 because of availability of information on the business.
Lieberman-Massoni v. Massoni
The trial court in this New York divorce awarded the value of the husband’s class B units in lieu of awarding a portion of the actual units to the wife and also barred the wife from any distributions on those units occurring after the valuation date.
New York Appellate Court Affirms Award of Value of Husband’s Class B Units in Lieu of Actual Distribution of Share of Units
The trial court in this New York divorce awarded the value of the husband’s class B units in lieu of awarding a portion of the actual units to the wife and also barred the wife from any distributions on those units occurring after the valuation date.
Novosel v. Azcon Inc.
In this ESOP-related case, the plaintiff (an ESOP plan beneficiary) raised three complaints, two of which were primarily the result of the performance and use by the ESOP of an interim valuation date for measurement of the value of her shares for her retirement payments made over time. There was also discussion regarding the interim value determined and whether a PPP loan of $1.2 million should have been considered. The defendants moved for dismissal on the first two accounts. The court denied the dismissal of the first complaint in regard to assertions that the use of the interim valuation date was arbitrary and capricious. It also allowed the filing by the plaintiff of a second amended complaint. The court granted the defendants’ motion to dismiss the plaintiff’s complaint regarding the asserted cutback of accrued benefits.