Bocek v. JGA Associates, LLC

Date of Decision:  March 23, 2016

Court:  US District Court – Virginia

Key Issues:

A physician sued a business partner for the alleged lost opportunity to acquire a medical practice at a certain price. The appeals court validated the breach of fiduciary claim against the defendant and remanded for a trial on remedies. The trial court found that the income and market approaches employed by Plaintiff expert were inappropriate or applied incorrectly. The court also opined that expert’s lost earnings calculation was speculative. The court also indicated that Plaintiff’s expert chose to consider only the data that were favorable to the Plaintiff.

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Rubin v. Bedford

Date of Decision:  December 24, 2015

Court:  Appellate Court of Illinois

Key Issues:

This dissenting shareholder suit involves a challenge to a going private transaction. Plaintiffs’ attack on the sales price and process in trial court was not adopted based in part on questionable valuation testimony from an expert witness who admitted to having no formal training in accounting or business valuation. The appeals court affirmed, pointing to the Plaintiffs expert’s lack of awareness and understanding of business valuation issues.

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Merion Capital LP & Merion Capital II LP v. BMC Software

Date of Decision:  October 21, 2015

Court:  Delaware Court of Chancery

Key Issues:

Arbitrageurs alleged an activist investor forced a sale of the company below its value and petitioned the Delaware Court of Chancery for a statutory appraisal of their shares. Experts for both sides utilized the discounted cash flow method of valuation. The court ultimately decided the merger price in this specific situation was the more reliable indicator of value.

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Estate of Adell v. Commissioner

Date of Decision:  August 4, 2014

Court:  United States Tax Court

Key Issues:

The estate and the IRS introduced several wildly divergent valuations of the decedent’s 100% interest in a C corporation. The court criticized the estate’s “conflicting expert reports and three different values” of the decedent’s business interest. The court adopted the valuation the estate submitted with its original Form 706 filing and rejected the estate’s efforts to substitute it with a subsequent lower valuation.

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