Fair Market Value

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Road Trip

While there is tremendous diversity from state to state when it comes to statutory and judge-made law in business divorce cases, business valuation principles are—with a few notable exceptions—far more homogenous.  So it makes sense to occasionally venture beyond New York’s borders to see how other courts and experts are addressing the business valuation questions that New York-based business divorces often encounter.

This week’s post looks at several recent decisions across the country concerning valuation principles and discounts.  While each case features different applicable rules and agreements, our New York readers would be wise to note the persuasive power of these cases, especially given the sometimes-thin body of New York caselaw on business valuation issues.Continue Reading Cross-Country Valuation Check-Up: Discounts, Buy-Sell Agreements, and Ambiguity Potholes

Manhattan Commercial Division Justice Anil Singh’s recent decision in Saleeby v Remco Maintenance teaches some valuable lessons about how not to draft stock or membership interest redemption provisions in executive employment agreements. It’s in this week’s New York Business Divorce. …
Continue Reading Good Faith Trumps Sole Discretion in LLC Agreement’s Repurchase Provision

shortsTraditions are good. This blog has two annual traditions. First, at the end of each year I write a post listing the year’s top ten business divorce decisions. Second, each August I offer readers who are (or ought to be) on summer vacation some light reading in the form of three, relatively short case summaries.

So here we are in what’s been a particularly felicitous August weather-wise (at least here in the Northeast U.S.), with another edition of Summer Shorts. This edition’s summaries feature two out-of-state cases — one from Florida involving expulsion of an LLC member and one from Delaware involving the valuation upon redemption of an LLC member’s interest — and a New York appellate court decision involving the removal of a limited partnership’s general partner.

The Anti-Chiu: Florida Court Upholds LLC Member’s Expulsion

Froonjian v Ultimate Combatant, LLC, No. 4D14-662 [Fla. Dist. Ct. App. May 27, 2015].  The Florida intermediate appellate court’s ruling in Froonjian makes for a fascinating contrast with New York case law represented most prominently by the Second Department’s 2010 decision in Chiu v Chiu holding that, absent express authorization in the LLC’s operating agreement, a member’s involuntary expulsion is not permitted. Going 180° in the other direction, the Froonjian court upheld the majority members’ expulsion of a minority member from a Florida LLC that had no operating agreement, reasoning that the Florida default statute vesting all decision-making authority in the members acting by majority vote encompasses the authority to expel a member.
Continue Reading Summer Shorts: Member Expulsion and Other Recent Decisions of Interest

Do majority shareholders of a close corporation owe a fiduciary duty to a minority shareholder to make accurate financial disclosures to enable fair valuation of the latter’s shares for purposes of a voluntary buy-out? Find out in this week’s New York Business Divorce.
Continue Reading Blurring the Lines Between Oppression, Duty of Disclosure, and Fiduciary Breach

When a partnership is wrongfully dissolved and then continued by one of the partners, are the departing partners entitled to be paid fair market value or book value for their interests? That was just one of several interesting issues decided by an appellate panel last month in Quick v. Quick, which gets the not-so-quick treatment in this week’s New York Business Divorce.
Continue Reading Appellate Court Resolves Disputes Over Valuation and Capital Accounts in Partnership Dissolution Case