Category Archives: Litigation

Business Valuation: Depreciation Expense in Excess of Capital Expenditures

Hello, my name is Richard Claywell and this is Litigation Speaks. This week, I am discussing making a projection/forecast and having the depreciation expense exceed the capital expenditures.  However, before I get started I want to reiterate again that the example I am showing is from an actual case and this is what business valuation…  Continue Reading »

Business Valuation: Not Normalizing Operating Expenses

There are many reasons for a client to need to determine the value of a company.  Revenue Ruling 59-60 is the impetus for all business valuations (appraisals).  There are three approaches that are utilized to value a business.  The three approaches are the Asset-Based Approach, Income Approach and the Market Approach.  Underneath each approach there…  Continue Reading »

Upcoming Webinar: Nuts & Bolts of Lost Profit Cases

On Tuesday, April 10, Richard Claywell will be presenting as a panelist in Financial Poise’s webinar series: Complex Finance Litigation 2018. The panel of experts will explain the circumstances that warrant lost profits claims, key considerations for both the claimant and defendant, and how such claims will ultimately be evaluated. In order to successfully win (or…  Continue Reading »

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 »

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 »

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 »

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 »

Using the Proper Industry Classification Codes

Last week I finished reviewing a business valuation experts report for a litigation case. The appraiser used a NAICS code that, on the surface, appeared to have a valid description of the company. In fact, I instructed one of my employees to start the RMA Benchmarking analysis based on the NAICS code received from the…  Continue Reading »

Back to top