Source: https://www.bvresources.com/products/valuation-cases-from-the-delaware-court-of-chancery-show-how-to-excel
Timestamp: 2019-04-18 12:47:16+00:00

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Recognized as the nation's preeminent forum for the determination of disputes involving private and publicly held businesses, the Delaware Court of Chancery has long been known to business appraisers and attorneys as the source of many of the decisions and guidelines which govern the valuation process across the country. Business appraisers are advised to read Chancery decisions because they are relevant in many valuation practice areas.
Valuation Cases From the Delaware Court of Chancery Show How to Excel is an important and one of a kind reference tool for your library. The court case digests and articles presented in this special report provide rigorous analysis of and insight into the court’s view of business valuation methodologies and valuation techniques.
Chapter 2: Was the Delaware Chancery Too Quick to Dismiss the Build-up Method?
Allenson v. Midway Airlines Corp.
At issue is whether the concessions are an "element of value" that may be considered in determining the corporation's statutory fair value on the date of the merger.
Teaser: Delaware Supreme Court affirms $2 billion award for minority shareholders, based on finding that Chancery Court did not become “its own expert witness” in calculating fair value of shares from various sources, including expert DCF values.
Andaloro v. PFPC Worldwide, Inc.
PNC Financial Services Group, Inc. (PNC), the parent of PFPC Holding Corp. (Holding), had planned to take Holding's subsidiary, PFPC Worldwide, Inc. (PFPC), public via an initial public offering (IPO), but the opportunity did not arise.
Cede & Co. v. JRC Acquisition Corp., et al.
This dissenting stockholder appraisal action, arising out of a cash-out merger of the minority shareholders of stock of Technicolor, Inc., has been in litigation for over two decades.
Cede & Co., Inc. v. MedPointe Healthcare, Inc.
Delaware Chancery conducts thorough DCF analysis in breach of fiduciary duty/appraisal action, with emphasis on credible management projections and inputs.
Delaware Open MRI Radiology Associates, P.A. v. Kessler, et al.
Delaware Chancery outlines the scope of documents that are required to be produced for those seeking to value a closely-held company, including its wholly-owned subsidiary that lacks, in reality, a "separate existence."
The issue in this appraisal action was the value of Montgomery Cellular (MCHC), a telecommunications holding company.
Doft & Co. v. Travelocity.com Inc.
A minority shareholder of Travelocity.com Inc. (Travelocity) brought a dissenting shareholder action contesting the $28 per share it received in a short-form merger of Travelocity and seeking a determination of the fair value of its shares.
Edgewater Growth Capital Partners, L.P. v. H.I.G. Capital, Inc.
Emerald Partners v. Ronald P. Berlin, et al.
Finkelstein v. Liberty Digital, Inc.
In this appraisal action, the only valuation issue was the value of only one of the merged company's assets.
Gearreald v. Just Care Inc.
Delaware Court of Chancery prefers supply-side equity risk premium over historical ERP in statutory appraisal action, but rejects “novel” liquidity adjustment to size premium.
Gesoff v. IIC Industries Inc., et al.
The issue in this appraisal action was the value of the shares of eMachines Inc., a company that provided low-cost computer goods to consumers.
Delaware Chancery adopts supply-side equity risk premium and discusses appropriate terminal growth rate, tax rate, and beta in the statutory fair value appraisal of Russian telecomm company.
Delaware Supreme Court declines to adopt a “bright line” rule requiring appraisal authorities to defer to the merger price in determining statutory fair value.
This is the court of chancery's response to a remand with instructions from the Delaware Supreme Court.
Gray v. Cytokine Pharmasciences, Inc.
The issue in this case was the fair value of the shares of PharmaSciences, Inc.
Hexion Specialty Chemicals, Inc. v. Huntsman Corp.
Delaware Chancery Court finds buyer knowingly and intentionally breached merger agreement by seeking insolvency opinion to derail financing and avoid liquidated damages.
Highfields Capital, Ltd. v. AXA Financial, Inc.
Delaware Chancery Court favors “shared synergies” and actuarial analysis in the fair value appraisal of an insurance conglomerate’s merger.
In statutory appraisal action, Chancery scrutinizes merger price for downward or upward adjustment based on improper inclusion of synergistic value or exclusion of value stemming from business opportunities arising prior to consummation of merger.
DE Chancery Court approves sale of hard-to-value internet company, even though lack of any long-term forecasts prevented DCF analysis, and fairness opinion had to rely on market approach despite lack of truly comparable public companies.
DE Chancery Court finds price and process for sale of cable TV systems was fair, despite contemporaneous valuation that appraised the systems individually rather than on aggregate, and did not expressly include or quantify synergies.
In re Cysive Shareholders Litigation v.
Despite a disturbing record of questionable valuations and conflicted financial advisors and principals, the Delaware Chancery Court declines to enjoin the billion-dollar merger of Kinder Morgan with El Paso.
The court in this case placed a fair value of $38.05 per share on the stock of a company which was acquired in a two-step going private transaction at $10.25 per share based on a fairness opinion.
In re MFW Shareholders Litig.
DE Chancery adopts business judgment review standard where controlling stockholder buyout includes two procedural protections for minority and finds valuations from independent financial advisor demonstrate merger was favorable to minority stockholders.
In re PNB Holding Co.
Delaware Chancery prefers traditional DCF analysis over market approaches to calculate fair value for merger price.
In re Southern Peru Copper Corp.
Delaware Chancery finds merger process and price tainted by “relative” DCF valuations that obscured “real world” market values, and orders $1.3 billion in damages, based on its own calculation of DCF of acquired company.
Delaware Chancery court confirms its preference for a DCF analysis, discredits company-specific risk premium, discusses circular logic behind selection of small-firm risk premium, and rejects value adjustment for post-merger conversion to an S Corp.
The issue in this appraisal action was the value of the shares of two cellular companies (Janesville and Sheboygan).
Delaware Chancery Court confirms its preference for the DCF approach in a statutory appraisal action as well as the CAPM for calculating the discount rate and the supply-side ERP, but rejects an adjustment to the size premium to account for the latter.
IQ Holdings, Inc. v. American Commercial Lines Inc.
Delaware Chancery Court declines to establish a valuation preference for “normalized” discounted cash flow analysis.
John A. Gentile, et al. v. SinglePoint Financial, Inc.
In statutory appraisal action, Chancery agrees with experts that lack of management cash flow projections precludes use of DCF analysis, and adopts DCCF method resolving valuation disputes related to experts’ inputs and calculations.
Lane v. Cancer Treatment Centers of America, Inc.
Louisiana Municipal Police Employees' Retirement System v. Countrywide Financial Corp.
In context of shareholder seeking access to company books, Delaware Chancery approves unique statistical methodology for testing whether stock option backdating has occurred.
Maric Capital Master Fund, Ltd. v. Plato Learning, Inc.
Delaware Chancery enjoins merger based on flawed proxy statement, including overstated discount rate in valuation and selectively chosen cash flow projections.
Merion Capital, L.P. v. 3M Cogent, Inc.
Michael F. Taylor v. American Speciality Retailing Group, Inc.
Verizon Inc. had offered to buy MCHC’s majority holder, Palmer Wireless Holdings (Palmer), if Verizon’s initial public offering was successful and if Palmer could acquire 100% of the stock in all of the companies it held.
In a major pharmaceutical case, on remand Delaware Chancery finds plaintiff proved it had a reasonable expectation of profits at the time of breach; court accepts plaintiff expert’s damages model, but orders adjustments, particularly to sales quantity.
Reis v. Hazelett Strip-Casting Corp.
DE Chancery Court makes substantial normalizing adjustments to capitalization of earnings values from “dueling” experts to determine fair value for fractional interests created by company’s reverse stock split.
Delaware Chancery Court permits shareholder derivative suit to proceed against corporate board in the stock option backdating context.
Delaware Chancery urges experts to use “robust” “triangular” valuation approach, including DCF, comparable companies, and comparable transactions.
Delaware Chancery Court resolves ambiguities in CPA firm operating agreement to find that its provisions for liquidation value, rather than statutory fair value as a going concern, control buy-out price for retiring partner.
Stuart Agranoff, et al. v. Edward M. Miller, et al.
SV Investment Partners v. Thoughtworks, Inc.
Delaware Chancery finds that “funds legally available” for corporate stock redemption requires more than calculating a balance sheet surplus valuation.
Towerview LLC v. Cox Radio, Inc.
Union Illinois 1995 Investment Limited Partnership v. Union Financial Group, Ltd.
Delaware Chancery Court applies a multiple of EBITDA analysis in assessing breach of contract expectancy damages, expressly rejecting DCF approach and fair market value.

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