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Appraisal Rights Litigation Blog

Category Archives: Valuation Expert

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Delaware Chancery Court Increases Appraisal Award

Posted in Award Premium, Discounted Cash Flow Analysis, Perpetuity Growth Rate, Risk-free Rate, Terminal Value, Valuation Expert

In a new ruling in the DFC Global appraisal case, about which we’ve posted before, Chancellor Bouchard has now reconsidered his prior award of 7% over the merger price and increased his prior award by an extra 9 cents per share, translating to an additional $12 million in value above his prior ruling. Both sides… Continue Reading

Valuation Basics: Comparable Companies Analysis

Posted in Comparable Companies, Fair Value, Valuation Basics, Valuation Expert

Our “Valuation Basics” series has focused on the various components of a discounted cash flow analysis under the income approach, which seeks to value a company based on the present value of its projected cash flows.  This post and those to follow in this series will now move away from the income approach and instead… Continue Reading

Delaware Chancery Court Looks to Merger Price for Fair Value

Posted in Discounted Cash Flow Analysis, Fair Value, Independent Valuation, Merger Price, Valuation Expert

We posted last month about the Delaware Chancery Court’s ruling in Ancestry.com, in which it upheld the growing practice of appraisal arbitrage. The Chancery Court has now rendered its valuation decision in that case, finding the merger price itself to be the most fair measure of stockholder value on a going concern basis. As Reuters… Continue Reading

Delaware Supreme Court Schedules En Banc Review in Appraisal Rights Case

Posted in Discounted Cash Flow Analysis, Fair Value, Independent Valuation, Interest on Appraised Value, Merger Price, Synergies, Valuation Expert

The Delaware Supreme Court has scheduled the case of Huff Fund Investment Partnership v. CKx Inc. for en banc review in February 2015. The Chancery Court rejected the valuation methods proposed by the parties and deferred to the merger price as the only reliable indicator of value. The Chancery Court likewise rejected the shareholders’ argument… Continue Reading

Valuation Basics: Equity Risk Premium and Beta

Posted in Beta, Discounted Cash Flow Analysis, Equity Risk Premium, Fair Value, Valuation Basics, Valuation Expert, WACC

Prior posts in our “Valuation Basics” series have examined the various components of the cost of equity capital under the Capital Asset Pricing Model (“CAPM”). In this post we continue our discussion of those components, focusing on the equity risk premium and its modifying coefficient, the beta. The CAPM has become the Delaware Court of… Continue Reading

Valuation Basics: Calculating the Equity Size Premium

Posted in Discounted Cash Flow Analysis, Fair Value, Size Premium, Valuation Basics, Valuation Expert, WACC

In a prior post, we explained how the Capital Asset Pricing Model (“CAPM”) has become one of the frequently employed methods used by the Delaware Court of Chancery to calculate the cost of equity for the discount rate in a DCF analysis. In this post, we focus on one specific component of the CAPM: the… Continue Reading

Do Investors Need To Worry About “Synergies” in Appraisal Proceedings?

Posted in Fair Value, Merger Price, Operative Reality, Synergies, Valuation Expert

The purchaser of a company through merger often argues in a subsequent appraisal action that the price paid was too high and that the dissenting shareholder should be paid a lower amount. Tactically, it is important for the purchaser to impress the dissenting shareholder with down-side risk in pursuing the appraisal. The resulting inference of… Continue Reading

Valuation Basics: Calculating Terminal Value Using the Gordon Growth Model

Posted in Discounted Cash Flow Analysis, Fair Value, Terminal Value, Valuation Basics, Valuation Expert

In a prior post we mentioned the three basic components of a discounted cash flow (“DCF”) valuation analysis — cash flow projections, a discount rate, and a terminal value — and explained how to calculate one of those components, the discount rate. In this post, we tackle another component, the terminal value. In a typical… Continue Reading

Valuation Basics: Determining a Discount Rate, or WACC

Posted in Discounted Cash Flow Analysis, Fair Value, Valuation Basics, Valuation Expert, WACC

The discounted cash flow method, or “DCF”, has become the generally accepted method of valuation in Delaware’s Court of Chancery.  The DCF method seeks to value a company by discounting the company’s projected future cash flows to present value based on the perceived risk of investing capital in that company.  As recently summarized by Vice… Continue Reading

Delaware Chancery Court Rejects Merger Price as Measure of Fair Value in Appraisal Rights Cases

Posted in 60-Day Look-Back, Fair Value, Merger Price, Valuation Expert

As more fully explained in a Law360 article by the same authors of this Blog, just last month the Delaware Chancery Court squarely rejected any suggestion that the merger price paid for a company is a proxy for the fair value of its stockholders’ shares. Consistent with two landmark Delaware rulings of the past few… Continue Reading

Increasing Returns to Professional Investors in M&A Deals

Posted in 60-Day Look-Back, Fair Value, Interest on Appraised Value, Merger Price, Valuation Expert

Dell’s Proposed Take-Private Transaction Brings Appraisal Rights Into Focus In response to Michael Dell’s recent offer of $13.65 per share to take Dell Inc. private, Carl C. Icahn reminded his fellow shareholders of a powerful but underutilized tool under Delaware law to maximize their investment returns in the proposed transaction.  His message:  exercise your appraisal… Continue Reading