Category Archives: Court Rulings

Court Increases Dissenters’ Buyout Offer by More than 25%

In Re: Appraisal of Dell Inc., Delaware Ch., C.A. No. 9322-VCL, May 31, 2016 When computer maker Dell decided to delist in 2013, its board agreed to buy out dissenting shareholders for $13.75 per share. The dissenters argued that the buyout price was unfair — and the Delaware Chancery Court recently agreed, valuing the stock…  Continue Reading »

Trial Court uses DLOM to Achieve “Fairness and Equity”

Parker v. Parker A New Jersey trial court applied a 25% discount for lack of marketability (DLOM) to punish a selling shareholder for his oppressive behavior toward the purchasing shareholder, in this appraisal rights case. In New Jersey and other jurisdictions that follow similar rules, some valuation professionals worry that this decision could set an…  Continue Reading »

Historic Storm Leads to Contract Termination…and a Lawsuit

In Katrina’s wake Among the most documented disasters in U.S. history was Hurricane Katrina. However, the legal ramifications of that terrible, historic storm have been relatively less acknowledged. This has changed as more and more Katrina-related decisions are handed down. Citadel Builders v. Transcontinental Realty is one such case, which addresses a contract termination dispute.…  Continue Reading »

Growth Rate Becomes Critical to Lost Profits Calculation

Selecting an appropriate growth rate is a critical step in calculating damages in Texas commercial cases involving lost profits. However, it’s also one of the most challenging. Depending on the amount at stake and the length of the damages period, adjusting the growth rate by just a few percentage points can have a significant effect…  Continue Reading »

Economic Damages 101

As many businesses in Texas already know, business disputes arise daily. Maybe a publisher infringes on a writer’s copyright, a supplier violates a provision of an exclusivity contract, or a competitor steals a trade secret. Typically, these wrongdoings result in one party losing money. It’s up to the legal system to restore order — and…  Continue Reading »

Using a Yardstick to Measure Damages

A tried-and-true way to measure economic damages in contract breach, patent infringement and other tort claims is the yardstick method. It’s based on comparisons with similar businesses. Here are some additional details on how this method works — and when it might not work as well. Find guideline companies In damages cases, financial experts are…  Continue Reading »

Deal Price Doesn’t Always Represent Fair Value

John Douglas Dunmire v. Farmers & Merchants Bancorp of Western Pennsylvania, Inc., 2016 Del. Ch., C.A. No. 10589-CB, Nov. 10, 2016 Laws have been enacted by many states that grant dissenting minority shareholders the right to receive “fair value” for their shares. Appraisal rights provisions protect investors, who may not be “willing” sellers, from being…  Continue Reading »

Finding Hidden Assets and Unreported Income

When valuing a Houston, TX business for divorce or shareholder disputes, the business valuation and forensic accounting disciplines often intersect. Controlling shareholders may, for example, try to hide assets or downplay cash flow to minimize buyouts of their spouses or minority shareholders. Valuation experts know how to unearth and adjust for financial misstatement, and are…  Continue Reading »

Beware of Valuation Provisions

PECO Logistics v. Walnut Investment Partners Recently, a Delaware Court of Chancery case demonstrates how courts give substantial weight to valuation provisions in owners’ agreements, especially when the experts follow the terms of these agreements and maintain their independence. Even though the investors objected to the purchase price determined under an owners’ agreement, some minority…  Continue Reading »

Spotlight on Marketability

Is it difficult to sell a business interest in Texas as well as other states? Public stocks can be converted to cash in three days, but it often takes a year or longer to sell a private business. Minority interests in private companies can be even harder to liquidate, because they may be subject to…  Continue Reading »

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