Business Valuation Articles

Delaware’s Supreme Court recently struck down a controversial statutory appraisal decision in Verition Partners Master Fund Ltd. v. Aruba Networks, Inc.

The cost of capital is an important consideration when valuing a business under the income approach.

The buyout provision of an owners’ agreement must be carefully drafted and regularly reviewed. If it isn’t, the buyout may not be legally enforceable — or serve the owners’ current needs.

In litigation involving professional practices, many courts have recognized the importance of industry-specific valuation experience.

Start-ups present valuation challenges because they often have limited earnings and cash flow. Business valuation experts must look to other factors, many of them subjective, to estimate value.

In commercial tort claims, courts must decide how much damage the plaintiff suffered from the defendant’s alleged wrongdoing. A recent Eighth U.S. Circuit Court of Appeals case upheld a jury’s damages award based on lost market value, even though the business wasn’t completely destroyed.

When divorcing spouses own a private business interest, it complicates the settlement process. In general, the business needs to be valued and then included — either entirely or partially, depending on state law and legal precedent — in the marital estate.

In intellectual property infringement cases, business valuation experts often use the Georgia-Pacific model to determine reasonable royalty rates. There are 15 factors that are considered under this model, but there is a market-based alternative that has also been gaining momentum.

When using the discounted cash flow method to value a business, a large chunk of the value is contained in the “terminal” value.

In recent years, Delaware’s Supreme Court has shown its preference, under the right circumstances, for market-based indicators of value in statutory appraisal cases.