Stock valuation aficionados will not want to miss the report in this week’s New York Business Divorce on the recent decision in Matter of Harlem River Yard Ventures, Inc. It’s a dissenting shareholder case triggered by a squeeze-out merger in which the court was faced with widely disparate expert valuations of a company holding a 99-year lease on the Bronx site of the former Penn Central rail yards, now serving as an industrial park.
Continue Reading Court Endorses Discounted Cash Flow Method, Rejects Post-Merger Tax Benefits, in Determining Fair Value Award to Dissenting Shareholder
Court Rejects Marketability Discount, Applies “Murphy Discount” for Built-In Gains, in Determining Fair Value of Shares in Real Estate Holding Corporations
Business valuation junkies, rejoice! This week’s New York Business Divorce revisits the Giaimo case, a bitter family business dispute being litigated in Manhattan Supreme Court, following a decision last week by Justice Marcy Friedman concerning a fair value determination by Referee Louis Crespo of a stock interest in two real estate holding “C” corporations, in which the discounts for lack of marketability and for built-in gains taxes take center stage.
Continue Reading Court Rejects Marketability Discount, Applies “Murphy Discount” for Built-In Gains, in Determining Fair Value of Shares in Real Estate Holding Corporations
Chris Mercer Tackles Statutory Fair Value
Chris Mercer, one of the country’s leading authorities on business valuation, has written a series of important and helpful articles on the statutory fair value standard used by courts in dissenting shareholder appraisals and oppressed minority shareholder buy-out proceedings. Get a taste in this week’s New York Business Divorce.
Continue Reading Chris Mercer Tackles Statutory Fair Value
Splitting the Baby: Court in Oppressed Shareholder Dissolution Case Divides the Company Assets
A post-trial decision last month by Justice Emily Pines in Matter of Wenger, a corporate dissolution case pitting father against son, addresses novel issues concerning shareholder standing and oppression remedies. It’s in this week’s New York Business Divorce.
Continue Reading Splitting the Baby: Court in Oppressed Shareholder Dissolution Case Divides the Company Assets
Key Person Discount Takes Center Stage in Stock Valuation Proceeding
The key-person discount makes a rare but ultimately unsuccessful appearance in a fair value buyout proceeding triggered by a corporate dissolution petition filed by minority shareholders of an office copier sales and leasing company. The valuation report by Referee Louis Crespo, and the decision confirming it by Manhattan Commercial Division Justice Barbara R. Kapnick, are featured in this week’s New York Business Divorce.
Continue Reading Key Person Discount Takes Center Stage in Stock Valuation Proceeding
Top 10 Business Divorce Cases of 2010
It’s the third anniversary of New York Business Divorce, and what better way to celebrate the occasion, and the New Year, than a look back at 2010’s top-ten business divorce cases.
Continue Reading Top 10 Business Divorce Cases of 2010
Failure to Define Terms in Buyout Agreements Leads to Litigation Woes
What do three recent decisions by the Wisconsin Supreme Court, the Appellate Division in Albany, and Nassau County Justice Ira Warshawsky have in common? They all involve disputes over poorly designed buyout agreements that fail to define critical terms. It’s in this week’s New York Business Divorce.
Continue Reading Failure to Define Terms in Buyout Agreements Leads to Litigation Woes
Court Hears Argument of Paul Jr.’s Appeal in American Chopper Buyout Dispute
Last week I stopped by the courthouse in White Plains to watch the oral argument of the appeal by Paul “Junior” Teutul of American Chopper fame from the lower court’s decision on which I previously reported, compelling him to sell his shares in the custom motorcycle business to his father and television co-star, Paul “Senior” Teutul. Get the full story in this week’s New York Business Divorce.
Continue Reading Court Hears Argument of Paul Jr.’s Appeal in American Chopper Buyout Dispute
Sassower Case Illustrates Anew the Price of Poorly Drafted Buy-Sell Agreement
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
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