What Kind of Value is Statutory Fair Value?

Kentucky Supreme Court Provides Guidance

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Several years ago, I wrote about the most recent appellate level case in Kentucky (Shawnee Telecom Resources, Inc. v. Kathy Brown) addressing the question of statutory fair value in Kentucky. Given several recent conversations with Kentucky clients, a revisit of that case seems appropriate.

Idaho Supreme Court Affirms No DLOC and No DLOM in Fair Value Proceeding

Statutory Fair Value and Business Valuation Series #9

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The Idaho Supreme Court issued an opinion in Wagner v. Wagner affirming a District Court’s determination in the fair value of shares of Wanooka Farms, Inc. This determination of fair value was a matter of first impression in Idaho. The District Court determined that neither a discount for lack of control (minority discount) nor a discount for lack of marketability (marketability discount) were appropriate in the determination of fair value. The Supreme Court in Idaho affirmed this conclusion, but where does this leave the definition of fair value in Idaho?

In Re: Appraisal of Dell Inc.: Asset Managers at Risk?

T. Rowe Price Did Not Dissent Properly and is Paying $200 Million to Investors

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In a decision issued May 11, 2016, Vice Chancellor J. Travis Laster of the Delaware Court of Chancery ruled that the 31.1 million shares of Dell Inc. held by T. Rowe Price Associates for various investors had not been properly perfected, giving asset managers an abrupt incentive to be meticulous.

Dell “Loses” the Appraisal Battle but “Wins” Overall

Statutory Fair Value in Delaware

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Dell Inc. engaged in a management buyout (“MBO”) in October 2013 that effectively took the Company private, leaving Michael Dell in control (75% of its stock) with a financial sponsor (25% of its stock).  The majority of shareholders tendered their shares, and received the offered consideration.  Certain shareholders dissented, setting in motion an appraisal proceeding in […]

Verghetta v. Lawlor: The Court Decides Fair Value

Statutory Fair Value and Business Valuation Series #8

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In the 8th post in my Statutory Fair Value and Business Valuation Series, we focus on the case Verghetta v. Lawlor. We consider five valuation issues this case raises: reasonableness of valuation conclusions, reasonableness of normalization adjustments, reasonableness of projections, whether the earnings of tax pass-through entities should be tax-effected, and appropriateness of a marketability discount.

The Discounted Cash Flow (DCF) Method

Statutory Fair Value and Business Valuation #6

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We continue our discussion of statutory fair value with an outline of the discounted cash flow (DCF) model (or method). The DCF valuation method is a core method within the Income Approach to Value (with the other two approaches being the Asset Approach and the Market Approach). One objective of this series of posts on statutory fair value is to outline sufficient valuation and finance theory so we can begin to examine cases, i.e., judicial interpretations of what fair value means. With the proper background, we will be able to understand and to interpret what the courts have said in the context of valuation theory.

What is a Proportionate Interest in a Going Concern?

Statutory Fair Value and Business Valuation Series #5

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If fair value in a jurisdiction is the proportionate interest in a going concern, it could either be at the strategic control level or the financial control level. However, because of the prohibition of the use of minority interest discounts, appraisers and courts need to develop a common vocabulary that will enable both to develop realistic indications of statutory fair value.

Wisniewski v. Walsh and the Bad Behavior (Marketability) Discount in New Jersey

Statutory Fair Value and Business Valuation Series #4

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Peter Mahler reported this week on a recent New Jersey appellate level case focusing on the application of a 25% marketability discount in a statutory fair value determination in his New York Business Divorce blog. The New Jersey Appellate Division issued an unpublished decision in Wisniewski v Walsh, 2015 N.J. Super. Unpub. LEXIS 3001 [App. Div. Dec. 24, 2015]. The case is interesting in that it attempts to determine a marketability discount in relationship to the “bad behavior” of a selling shareholder. Given the timeliness of the case, I’ll interrupt the background posts on statutory fair value for a week and look at this New Jersey case.