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 The New Jersey Appellate Division issued an unpublished decision in Wisniewski v Walsh, 2015 N.J. Super.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.

In the last post, we introduced the “traditional” levels of value chart with three distinct levels. In this post, we compare and contrast the traditional chart with a revised four-level (really three with the overlapping of marketable minority and financial control) chart.

In the initial post in this series on statutory fair value, we introduced the ideas that fair value is, in part, an equitable concept, and that appraisers are not in a position to make “equitable” decisions.

Appraisers cannot decide matters of equity, but we can provide good and clear valuation evidence to courts in statutory fair value matters. In this post, we will address what appraisers call “levels of value.” Courts are generally familiar with some of the concepts, but I do not believe that most courts are familiar with the growing understanding of the levels of value concept in the appraisal profession. This lack of understanding creates confusion and increases the difficulty of presenting valuation evidence in statutory fair value proceedings.

This is the first in a series of posts on the topic of Statutory Fair Value and Business Valuation. In this post, we examine the concept of statutory fair value, especially as it is defined in the state of Delaware as well as the difference between the concepts of “fair value” and “fair market value.”

Welcome to 2016! There will be changes to the focus of the blog in 2016. Read more about the changes here.

When I see stories in the financial press I often think of what lessons business owners can learn from the experiences of others. Perhaps there is a lesson to pay attention to basics in the emerging situation at Chipotle Mexican Grill, Inc. In this post, we consider Chipotle’s growth, decline, and the valuation relationship between expected growth and risk in light of the circumstances.

Peter Mahler writes the New York Business Divorce blog. Last week, he published his eighth annual list, the Top Ten Business Divorce Cases for 2015. I was interested and pleased to discover that the number one case on the list was that of Chiu v. Chiu, a case in which I testified as an expert witness in 2012.

Two standard questions business appraisers ask clients in the management interview process include: What has been your dividend (or distribution) policy leading to the present?  Now this is something of a trick question, because we can infer what the dividend policy has been in the past based on examining financial statements. What do you expect […]

Against the backdrop of the article, “A Missing Boom in Small-Business Sales” and my own thoughts on ownership and management transition, we consider not only why the wave of business transitions hasn’t fully occurred but also what you can do in the interim.

Leveraged dividend recapitalizations and leveraged share repurchases are two corporate finance tools that are available to owners of private companies. These tools can be used to create liquidity outside the ownership of private businesses. Interestingly, as we will see, leveraged dividends and leveraged repurchases have very similar impacts on companies (assuming similar companies and same-sized transactions), and quite different impacts on the owners of the companies. In this post, we will illustrate the impact of a leveraged share repurchase and a leveraged dividend on the same company. This analysis will enable us to see the impact leverage has on the company and also, the different impacts the transactions have on owners.