This week’s New York Business Divorce revisits the buy-out valuation contest going into its third year in Sassower v. 975 Stewart Avenue Associates, LLC, on the occasion of a recent decision by Justice Ira B. Warshawsky rejecting the parties’ dueling motions for summary judgment on the question whether the mortgage balance should be deducted from the subject company’s sole real estate asset in determining the purchase price of the minority interest being valued.
Continue Reading Sassower Case Illustrates Anew the Price of Poorly Drafted Buy-Sell Agreement
2010
Final Round of Corfian Case Features Diverse Dissolution Issues
The case of Pappas v. Corfian makes a return appearance in this week’s New York Business Divorce on the occasion of an action-packed decision last month by Brooklyn Supreme Court Justice Jack Battaglia granting a petition for dissolution based on shareholder oppression. You won’t want to miss it.
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Continue Reading Final Round of Corfian Case Features Diverse Dissolution Issues
Recent Appellate Rulings Clarify Standards for Challenging Releases Given to Fiduciaries of Closely Held Business Entities: Part 2
In this second installment of a two-part series, New York Business Divorce examines recent First Department decisions clarifying the standards for overcoming general releases given in the context of transactions with fiduciaries in closely held business entities, where the plaintiffs allege that the fiduciary fraudulently induced them to enter into the transaction. This week’s focus is on a case whose name should be familiar to regular readers of this blog, Arfa v. Zamir, 2010 NY Slip Op 06070 (1st Dept July 13, 2010).
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Continue Reading Recent Appellate Rulings Clarify Standards for Challenging Releases Given to Fiduciaries of Closely Held Business Entities: Part 2
Recent Appellate Rulings Clarify Standards for Challenging Releases Given to Fiduciaries of Closely Held Business Entities: Part 1
This week and next, New York Business Divorce examines two recent First Department decisions clarifying the standards for overcoming general releases given in the context of transactions with fiduciaries in closely held business entities, where the plaintiffs allege that the fiduciary fraudulently induced them to enter into the transaction. This week’s focus is on Centro Empresarial Cempresa S.A. v. America Movil S.A.B. de C.V., 2010 NY Slip Op 04719 (1st Dept June 3, 2010).
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Continue Reading Recent Appellate Rulings Clarify Standards for Challenging Releases Given to Fiduciaries of Closely Held Business Entities: Part 1
Guest Post: Business Appraiser Jeff Risius on the Equity Risk Premium
I’m pleased to present a guest post on an important valuation topic by business appraiser Jeffrey M. Risius (jrisius@srr.com). Jeff is a Managing Director at Stout Risius Ross, Inc., a financial advisory firm specializing in valuation and financial opinions, investment banking, and dispute advisory and forensic services. Jeff specializes in valuation in a litigation setting including shareholder proceedings, bankruptcy matters and transaction disputes. Jeff’s below post elegantly explains one of the fundamental aspects of business appraisal, namely, ascertaining the equity risk premium component of the capitalization rate used in the discounted cash flow ("DCF") method. As you’ll read, this issue took front and center in a recent decision by the Delaware Chancery Court. I think you’ll find it very informative. – P.A.M.
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One commonly applied methodology in the valuation of businesses is the Discounted Cash Flow (“DCF”) Method. The premise of this method is that a company’s value is equal to the present value of all future cash flows expected to be generated by that company using a rate of return that incorporates the time value of money and the business risk associated with the cash flows. The appropriate rate of return to utilize in the DCF Method is closely related to the perceived level of risk associated with the projected cash flows.Continue Reading Guest Post: Business Appraiser Jeff Risius on the Equity Risk Premium
Keeping the Gag on Ex-Business Partners: LLCs and Confidentiality Agreements
In two recent decisions, courts in Delaware and New York addressed obligations of non-managing members of LLCs to maintain the confidentiality of company trade secrets. These cases provide important lessons for attorneys who prepare LLC operating and employment agreements. It’s in this week’s New York Business Divorce.
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Are LLC Organizers Fiduciaries?
The Appellate Division, First Department, broke new ground with a controversial decision earlier this month holding that LLC organizers owe a fiduciary duty when soliciting members. Read about it in this week’s New York Business Divorce.
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Continue Reading Are LLC Organizers Fiduciaries?
Appellate Court Rejects Mandatory Stock Buyback Triggered by Dissolution Petition
This week’s New York Business Divorce revisits an important topic, involving mandatory stock buybacks triggered by the filing of a dissolution petition, prompted by a recent decision by an upstate appellate court in Matter of Stevens (Allied Builders, Inc.).
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Continue Reading Appellate Court Rejects Mandatory Stock Buyback Triggered by Dissolution Petition
The Stakes Just Went Up for Failing to Update Certificate of Value
Many shareholder and operating agreements provide redemption rights at a price stated in an appended certificate of value which is supposed to be updated periodically but often is not. A recent decision by Justice Stephen A. Bucaria addresses potential liability when the certificate of value is not timely updated. Learn more in this week’s New York Business Divorce.
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Continue Reading The Stakes Just Went Up for Failing to Update Certificate of Value
Ruling on Valuation Discounts for Marketability, Built-In Gains Tax Ends Rift Among New York Appellate Courts
The Appellate Division, Second Department last week affirmed the key rulings by Justice Ira Warshawsky in the Murphy v. U.S. Dredging valuation case, including his application of a marketability discount to entire enterprise value rather than limiting it to good will. Learn more in this week’s New York Business Divorce.
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Continue Reading Ruling on Valuation Discounts for Marketability, Built-In Gains Tax Ends Rift Among New York Appellate Courts