Business Valuation Resources: Case Studies
- “The Case of the Dueling Appraisers”
We have been involved in dozens of disputes in which
each side retained a business appraiser and the two resulting opinions
differed sufficiently that no negotiated settlement was immediately
feasible. Some of these cases involved actual litigation, some
involved arbitration or mediation, and others
were handled outside of these processes.
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full case study (78kb PDF)
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- “The Case of the Properly
Planned Family Limited Partnership”
Problem:
How to Structure and Value Family Limited Partnerships
A significant part of our practice addresses the value of minority
limited partnership interests. Properly planned with an appropriate
business purpose
and by skilled legal counsel, a family limited partnership can provide
a vehicle for family asset management and estate tax minimization.
In two recent cases, we valued non-marketable limited partnership
or limited liability
corporation interests with specific reference to the actual facts
and circumstances of the partnership and operating agreements.
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the full case study (86kb PDF)
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- “The Case of the Provisional
Director”
Problem: Need for Provisional Director in Shareholder Dispute Situations
In many cases, deadlocked and disputing equal shareholders turn to
the courts for dispute resolution and assistance. In three different
cases (2001-2003), we have been appointed and approved by the court
and shareholders to serve as a Provisional Director pursuant to California
Corporations Code (CCC) Section 2000. In fact, it has been our
experience to date that this process is “better” than
a 3rd-party
receivership or the stalemate that has resulted from the shareholder
dispute / differences in opinion.
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the full case study (76kb PDF)
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- “The Case of a Qualified Second Opinion”
Problem:
Review of Non-Conforming Appraisal Reports
We were recently contacted by counsel and the local Superior Court
in two different cases to review the report and valuation calculations
of another appraiser. Regretfully, in both instances neither appraisal
report conformed to the Uniform Standards of Professional Appraisal
Practice (USPAP) and were not prepared by certified or credentialed
appraisers.
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the full case study (76kb PDF)
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- “The Case of the Right Deduction”
Client’s Situation:
About five days before the deadline to file his annual tax return,
a client and his accountant called us to assist in what they thought
would be an easy problem to solve. After all, in November, 1997,
the client (the sole owner of all 600 outstanding common shares of
the subject company) had entered first into a Letter of Intent, then
Definitive Agreements to sell his company for $95.0 million. The
transaction was to close March 1, 1998.
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the full case study (81kb PDF)
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- “The Case of Transaction Advisory
Services”
Professional standards present a clear distinction in our work and
the expression of our estimates of value as (1) calculations, (2)
within a scope-restricted report, (3) within a full self-contained
report and (4) in a review report. In many cases, potential clients
come to us asking us to appraise their business. In fact, what
they really want is a set of calculations (usually
presented within a range) and someone to represent them in negotiations
with the buyer. This is the “classic” determination of
the difference between fair market value (hypothetical buyer / hypothetical
seller) and investment value (actual buyer / actual seller). Of course,
synergies and strategic value are considered by the investment value
standard.
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the full case study (81kb PDF)
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- “The Case of the Well Reasoned
and Documented Opinion”
The Value of Independent, Non-Advocacy Testimony
In a recent case, we were deposed presenting what opposing counsel
later termed "a well-reasoned report" that assisted the
litigating parties and counsel to reach a pre-trial settlement.
In the instant case, we estimated a range of damages to a plaintiff
resulting from a contract dispute with the other shareholder. We
used extensive Internet and library research to independently support
our reasonable assumptions. In a second case, we participated in
a twelve-hour mediation session providing technical input to both
parties and tax-advantaged structuring to "close the gap" and
significantly assist in the final settlement terms. While not unique,
we felt that the unbiased professional opinion expressed as a non-advocate
can be extremely valuable to the parties and court when assessing
the range of possibilities that can result at trial.
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the full case study (60kb PDF)
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- “The Case of the Wrong Appraisal
Assignment”
Problem:
Determining the Equity Interest in a “C” Corporation
Two equal shareholders had been directed by the court to value their
equity interest in a regular “C” corporation. The subject
corporation was
a General Partner in a venture (partnership) to build a series of
tract homes. Excellent detailed records of costs incurred and projected
future costs were available. The only real variable was the anticipated
selling price of each unit and the “absorption rate” (the
number of units sold each month). The opposing appraisal expert valued
the project itself (really
an asset of the partnership, not the corporation). No reference to
the standard of value was given.
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the full case study (79kb PDF)
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- “The Case of the Unnecessary
Appraisal”
An investment banker wanted to retain us to appraise a private company whose
owner wished to transfer a minority interest to a trust. This would have been
a routine engagement (value the company and determine appropriate minority interest
discounts for lack of control and marketability) except for one thing: The investment
bank was in the middle of selling the company!
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study (54kb
PDF)
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