Business Valuation Update
- How to Review a Report’s Valuation Methodology
- Ideas for Solving Two Problems in the BV Profession
- How Do Your Firm’s Benefits Stack Up?
- Using Rule of Thumb Data to Uncover Cooked Books
Chancery Says Solid Sales Process Lends Credibility to Deal Price
In appraisal action, Chancery says final merger consideration best represents fair value, noting sales process led to “meaningful price discovery”; court says with DCF too much depends on assumptions; small changes may have outsize impact on value range.
‘Fanciful’ Projections Make DCF an Unreliable Tool in Appraisal Proceeding
In statutory appraisal, Chancery decides to “defer” to deal price, citing a robust sales process and well-functioning market; petitioners’ DCF analysis was not a useful valuation tool where it was based on, “at best, fanciful” management projections.
Delaware Chancery Court reaches huge fair value conclusion - Standard of review is “entire fairness”
A recent decision of the Delaware Chancery Court placed an amazing fair value of $38.05 per share on the stock of Emerging Communications, Inc. (ECM), which was acquired in a two-step going ...
Lessons on Using the Guideline Public Company Method From the Delaware Court of Chancery
Valuation-related decisions from the Delaware Court of Chancery provide important guidance to business appraisers across the country, according to Jeffrey S. Tarbell, ASA, CFA (Houlihan Lokey), who presented a case update at the most recent ASA Advanced B ...
Highlights of 2020 Delaware Valuation Decisions
This article discusses two 2020 Supreme Court decisions and eight decisions by the Court of Chancery.
Highlights of 2019 Delaware Valuation Decisions
This year to date has been another active period for valuation cases in the Delaware courts. Six cases are reviewed and the predominant theme is that, in arm’s-length transactions, appraisal value continues to be based primarily on the transaction price rather than on discounted cash flow.
Errors and Omissions in DCF Calculations: A Critique of Delaware’s Dr Pepper Appraisal
The recent statutory appraisal of Dr Pepper Bottling Holdings, Inc. (“Holdings”) by the Delaware Chancery Court in Crescent/Mach I Partnership v. Turner 1 raises several conceptual and computational issues concerning discounted cash flow (DCF) valuations ...
10 Best Valuation Cases for 2015
Valuation plays a key role in most civil litigation. Appraisers testify in divorce cases, contract disputes, bankruptcy proceedings, statutory appraisal actions, patent litigation and a host of other suits. All of this activity produces a continuous stream of case law. But some cases are more impactful than others. Here are 10 cases that stood out in 2015.
Cede & Co. v. Technicolor, Inc., Delaware’s oldest valuation case
Cede v. Technicolor, the longest-lasting litigation in Delaware, continues to move toward its conclusion. This statutory appraisal case began in 1983, and the latest Court of Chancery decis ...
Cellular Telephone: An Interesting Decision for Valuation Practitioners
A recent Delaware decision in a breach of fiduciary duty case awarded more than triple the amount originally paid to partners who were squeezed out of their collective 1.881% interest in a partnership. Several aspects of this decision are of particular interest to valuation practitioners, especially those whose practice includes litigation services. The case is: In Re Cellular Tel. P’ship Litig.; 2022 Del. Ch. LEXIS 56 (Cellular).
BVU News and Trends May 2018
A monthly roundup of key developments of interest to business valuation experts.
No Preference for Normalized DCF in DE Chancery
Delaware Chancery Court declines to establish a valuation preference for “normalized” discounted cash flow analysis.
Court Uses DCF to Determine Fair Value of Dissenter's Shares
Petitioner dissented from a merger agreement and pursued his statutory right to an appraisal of his 8% interest in MPM Enterprises Inc., a company that manufactures screen printers for the surface mount technology industry.
Merger Prospectus Criticized for Misleading Discount Rate and Management Projections
Delaware Chancery enjoins merger based on flawed proxy statement, including overstated discount rate in valuation and selectively chosen cash flow projections.
DE Chancery Accused of Becoming Its ‘Own Expert Witness’
Delaware Supreme Court affirms $2 billion award for minority shareholders, based on finding that Chancery Court did not become “its own expert witness” in calculating fair value of shares from various sources, including expert DCF values.
Delaware Chancery Prefers 'Traditional’ Over ‘Intuitive’ DCF in Appraisal Action
Delaware Chancery prefers traditional DCF analysis over market approaches to calculate fair value for merger price.
Uncertainty Over Key Inputs Compromises DCF, Chancery Says
Chancery favors merger price, without synergy adjustment, over DCF-generated value, noting uncertainties over key inputs such as projections, equity risk premium, terminal growth rate as well as the “wildly divergent” DCF results of the parties’ experts.
Chancery Assigns Secondary Role to Post-Merger DCF
In an appraisal action, Chancery says merger price stemming from robust sales process is best indicator of value; court’s own DCF valuation “is close to the market,” but problematic projections make it more suitable as a check on the sales-derived price.
Delaware Court Relies on Comparable Acquisition Method
Vice Chancellor Jacobs issued an opinion with respect to the appraisal of a bank holding company.
Delaware Chancery Court’s Appraisal Puts Focus on Precrisis Projections
In statutory appraisal action related to radio broadcasting business, Court of Chancery affirms that pre-merger management projections generally are an “appropriate starting point” for the requisite DCF analysis; however, given signs of secular change in ...
Delaware Chancery’s Preference for DCF Turns on Credible Projections
Delaware Chancery conducts thorough DCF analysis in breach of fiduciary duty/appraisal action, with emphasis on credible management projections and inputs.
Delaware Critiques Conventional BV Models for Valuing an Emerging, Short-Lived Niche Company But Goes With DCF
The issue in this appraisal action, filed by Robert Michael Lane, was the fair value of the common stock of Cancer Treatment Centers of America Inc. (CTCA or the Company).
Another ‘Must-Read’ Decision From Delaware Chancery on the DCF, Discount Rate, and More
Delaware Chancery Court confirms its preference for the DCF approach in a statutory appraisal action as well as the CAPM for calculating the discount rate and the supply-side ERP, but rejects an adjustment to the size premium to account for the latter.
Merger-Related Projections Pass Muster With Delaware Chancery
In statutory appraisal action, Court of Chancery discredits respondent’s comparable company analyses because the comparables were significantly smaller than the target and not in the same industry or had different multiples; as to the DCF analysis, the ta ...
Experts Rejected for Conflict of Interest and Failure to Use Management Projections
The issue in this case was the fair value of the shares of PharmaSciences Inc. (PSI).