The issue of DLOM in fair value proceedings involving dissenting shareholder appraisals and oppressed minority shareholder buyouts is an issue of rising concern. Our reporting on the recent DLOM decision in the long-lasting Wisniewski v. Walsh case has fueled the fire.
BV nightmare: In his blog, Chris Mercer (Mercer Capital) says the DLOM rulings in the case reflect the trial court's preoccupation with equities rather than the economics of the business in play. He calls the case a “business appraiser’s nightmare.” Mercer writes:
If trial courts determine marketability discounts as bad behavior discounts, there really is no way that business appraisers can provide meaningful information to a court. If the court’s concern is one of “the equities” in a matter rather than in determining the fair value or the fair market value of a business or interest in a business, then there is little that appraisers can do to help. In Wisniewski, the application of a marketability discount flowed, not from the lack of marketability of the trucking business, but from the bad behavior of Norbert. Neither Trugman nor Grabowski had a chance in that determination. All we can say is that the court’s ultimate conclusion for the bad behavior (marketability) discount fell within the range of that suggested by Trugman (0%) and Grabowski (35%) and had nothing to do with the relative marketability of the business at hand.
What do you think about this? Join the BVR LinkedIn group—there’s a new discussion: “Bad Behavior DLOM in New Jersey.”