Opinion ID: 2071492
Heading Depth: 2
Heading Rank: 4

Heading: Use of Discounted Earnings Method of Valuation

Text: Defendants also challenge the court's use of the discounted future earnings method in valuing Waller's shares. Again, we disagree. As explained by Waller's expert, this method of valuation is indistinguishable from determination of market value by the income capitalization method, which we have described as probably the most accurate way to establish value, at least as to commercial properties, because it values property on the basis of what income it will yield to the purchaser  and income is the very reason for the purchaser to acquire the property. Beach Properties, Inc., 161 Vt. at 372, 640 A.2d at 52. The weight to be given to a particular method of valuation of securities is within the sound discretion of the court. Independence Tube Corp. v. Levine, 179 Ill.App.3d 911, 129 Ill.Dec. 162, 165, 535 N.E.2d 927, 930 (1989); In re Valuation of Common Stock of McLoon Oil Co., 565 A.2d 997, 1001 (Me.1989); see also Goodrich v. Goodrich, 158 Vt. 587, 590, 613 A.2d 203, 205 (1992) (in valuation of business for divorce purposes, no single methodology is mandated, and so long as valuation is supported by credible evidence, it will suffice). The income capitalization approach may be used to value a minority interest in an action such as the one at bar. See In re Seagroatt Floral Co., 78 N.Y.2d 439, 576 N.Y.S.2d 831, 834-35, 583 N.E.2d 287, 290-91 (1991) (approving use of capitalization of earnings valuation method for company stock).