BVR's Guide to Fair Value in Shareholder Dissent, Oppression and Marital Dissolution

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Preview the Table of Contents & Excerpt from BVR's Guide to Fair Value in Shareholder Dissent, Oppression and Marital Dissolution

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For a list of links to full texts of court case opinions related to Fair Value Dissent and Oppression, click on the heading below.

Fair Value



Statutory Fair Value of Real Estate Holding Co. Includes Transaction Costs, Taxes

Brynwood Co. v. Schweisberger, 2009 WL 2218728 (Ill. App. 2 Dist.)(July 23, 2009)(unpublished) Several professional tenants in a commercial office formed a C corporation to purchase the property in 1979. The owner of an accounting firm took a lead interest (26%), served on the board of directors, and provided the company’s accounting services until he retired in 1996. The remaining shareholders’ interests ranged from 11% to 14%. The company owned and operated the building as its sole asset for nearly twenty-five years when the directors considered converting to an S corporation, primarily to avoid double taxation (at the corporate and shareholder level). The board also discussed selling the building and dissolving the company. The building was appraised five times, with values ranging from $850,000 to $1.43 million. In 2000, the company repurchased the shares of two non-tenant owners at $42.50 per share. During the next year, it offered to repurchase the interests of all non-tenant owners, including the retired accountant, for $48.50 to $50.00 per share. Click here to read the rest of this abstact.

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Bonus article by Douglas K. Moll: Shareholder Oppression and “Fair Value”: Of Discounts, Dates, AND Dastardly Deeds in the Close Corporation

The doctrine of shareholder oppression protects a close corporation minority investor from the improper exercise of majority control. When a minority shareholder establishes “oppressive”majority conduct, a court typically orders the majority to purchase the minority’s stock at its “fair value.” But what does fair value mean? Further, when is fair value to be measured? The questions are critical ones that affect the lives of countless close corporation investors and that generate an enormous amount of present-day litigation. This Article builds a case for defining fair value as enterprise value in the shareholder oppression context. The Article argues, in other words, that the buyout remedy should provide an oppressed minority investor with his pro rata share of the company’s overall value, with no reductions (or “discounts”) for the lack of control or liquidity associated with the minority’s shares. Moreover, the Article suggests that, in many situations, courts should allow an oppressed shareholder to choose between the “date of filing”and the “date of oppression”as the appropriate valuation date.

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  Fair Value In The News
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Local CPA to Speak at Prestigious National Conference on Personal Goodwill -
Potential income and estate tax issues created by the new Florida LLC Act - Lexology (registration)
Najah v. Scottsdale Insurance Company - The Recorder
Illinois Supreme Court denies Gingrich leave to appeal ruling in non-compete suit - Madison County Record
Strong Enrollment In Phase 3 Trial Means Good News For Titan Pharma (TTNP) - Seeking Alpha (registration)
  Fair Value In The BVWire
At the recent NACVA conference in Las Vegas, Roger Grabowski (Duff & Phelps) urged attendees to read the Delaware Court of Chancery's opinions. Reason: They provide comprehensive discussions of BV-related technical and legal issues. Here’s the latest example: Cost savings—a synergistic value?
Issue #142-1

It’s no secret that the Delaware Court of Chancery has a strong liking for the discounted cash flow (DCF) analysis in fair value determinations. For this reason, a decision in which the court expressly rejected the DCF method in favor of the actual merger price—which recently happened—is sure to...
Issue #135-2

The much-anticipated Standards of Value: Theory and Application, second edition, by Jay Fishman, Shannon Pratt, and William Morrison (John Wiley & Sons) is now available. Fishman was at the recent NACVA annual conference appearing on behalf of the book. BVWire believes this completely updated...
Issue #129-2

We believe BV appraisers should be on the speed-dial list of every business reporter, their expertise the "center column" of financial pages, but recently we’ve seen articles on appraisal topics in places from The New York Times to Forbes to a daily business blog that have somehow omitted BV...
Issue #127-1

Business appraisers may recall Giaimo v. Vitale, a dissenting shareholder case that affirmed the application of a discount for lack of marketability (DLOM) to the statutory fair value of a company that owned 19 apartment buildings. Importantly, the lower court did not distinguish between the...
Issue #124-1

  Fair Value In The Blogs
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