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Tennessee Supreme Court Addresses Statutory Fair Value for the First Time in 35 Years in Athlon Sports Communications

In a 1983 case, Blasingame v. American Materials, Inc., 654 S.W. 2d 659 (Tenn. 1983), the Supreme Court of Tennessee adopted what is called the “Delaware Block” method for determining the fair value of shares in dissenters’ rights cases in Tennessee. This method, considered alone, was already outdated by precedent case law in Delaware when Blasingame was issued. However, in the recent Athlon Sports Communications case, the Tennessee Supreme Court finally brings Tennessee dissenters’ rights appraisal determinations more in line with the majority of states.

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Do Business Owners “Know” the Value of Their Businesses?

Dangers of Thinking of a "Walk-Away Number" as the Value

Do business owners “know” the values of their businesses? And do they need help if and when they think about selling, either unexpectedly or as part of a plan? I answer these questions in this week’s post.

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The Promissory Note You Receive May Undermine the Fair Market Value of Your Stock

Buy-Sell Agreement Seller Beware | A Lesson via Video

Many buy-sell agreements will fail to deliver the fair market value of interests sold following trigger events, even if the valuation of the interests are exactly on point. I’ve written briefly about this topic before, but provide elaboration here.

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How to Avoid Problems with the Definition of “Disability” in Buy-Sell Agreements

A Valuation/Business Lesson on Video

In this post’s video, I briefly address the definition of disability in a real buy-sell agreement, explain why it will not work if there is a trigger event, and offer an objective suggestion to avoid problems with the definition.

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Congel v Malfitano: “The Value” or Fair Value or Bad Behavior Value in New York?

Yesterday, Peter sent me a copy of a New York Court of Appeals case, Congel v. Malfitano. In New York, the Court of Appeals is the appellate court, while trials occur in the lower level Supreme Court. Is this another “bad behavior” case like Wisniewski v Walsh? Let’s see.

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How to Avoid Valuation Problems with Life Insurance Associated with Buy-Sell Agreements

A Valuation Lesson on Video

One of the biggest and recurring problem with buy-sell agreements is their frequent failure to specify the role of life insurance proceeds. In the accompanying video, I provide a suggestion to solve the future valuation question.

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Business Valuation: Things Just Aren’t the Same Anymore After the Tax Cut and Jobs Act of 2017

The Tax Cut and Jobs Act of 2017 lowered the marginal corporate federal tax rate to 21%, and all of a sudden, things just aren’t the same anymore. At first blush, the impact of the recent tax cut is straightforward. Lower taxes mean higher after-tax cash flows, which should translate into higher values for businesses. But how much higher? Value is a function of expected cash flows, expected risk, and expected growth. While expected cash flow (after-tax) will be rising following the corporate tax cut, what happens to expected risk and expected growth?

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Fixed Price Buy-Sell Agreements and the Tax Cut and Jobs Act of 2017

Since the idea of a fixed price buy-sell agreement is appealing and conceptually simple, many companies employ it. The problem is that the parties seldom reset the prices in their fixed price agreements — a major problem in the current environment considering the value of many businesses changed under the new tax law. In this post, we consider the impact of the Tax Cut and Jobs Act on fixed price buy-sell agreements.

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Valuation Implications of the Tax Cuts and Jobs Act of 2017

Focus on Privately Owned C Corporations

The Tax Cuts and Jobs Act of 2017 was signed into law by President Trump on December 22, 2017. President Trump calls the bill the biggest tax cut in American history, and there were substantial reductions in both corporate and personal income tax rates. The tax reduction act will impact C corporations as well as pass-through entities. This post focuses only on C corporations and looks at the marginal impact of the change.