In Dissenting Shareholder Appraisal Rights Matters (Part I of II) The Delaware Court of Chancery decisions on the treatment of synergistic value in dissenting shareholder appraisal rights cases provide meaningful guidance to valuation analysts, legal counsel, and other courts. In this two-part article, the author discusses recent judicial decisions issued by the Delaware Court of Chancery where synergistic value was a consideration in a dissenting shareholder appraisal rights matter. This discussion provides insights related to the treatment of synergistic value within the context of a statutory appraisal rights fair value controversy. [su_pullquote align=”right”]Resources: Foundations Of Financial Forensics Workshop Financial Litigation…
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Is it the Market or the Model? Petitioners in Delaware appraisal cases must necessarily argue that fair value exceeds the deal price. In contrast, financial economists tend to view prices from a well-functioning market as “true north” when valuing a stock. Valuation models—such as a discounted cash flow (DCF) model—+can be important tools but are known to be sensitive to their numerous inputs. When such a model results in a valuation that is at odds with market prices, it is imperative to understand the disconnect: Is it the market or the model that is wrong? In this Q&A, Analysis Group…
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Highlighting Recent Delaware Court Cases In this Case Law Update, three recent Delaware Court cases are reviewed. Two cases focus on whether the deal value is fair value and the third focuses on matters discovered following approval of a merger and who has standing to sue and what remedy, if any, is available to the disgruntled plaintiffs. The first two cases also delve into the role of experts, inputs that are used in the DCF (and usually contested), and the role of board members overseeing the process, as well as the value of process itself discovering price. The third case…
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Fair Value Not Based on the Merger Price (Part II of II) This is the second of a two-part article (read part one here) that focuses on the SWS Group, Inc. case and the interplay between merger price and fair value. In earlier cases, the Delaware Court of Chancery rejected a merger price indication in favor of its own discounted cash flow analysis. Yet, in the SWS Group, Inc. appraisal decision, instead of a decision supporting a higher fair value, the court ultimately found that the merger price was too high. This ruling highlights the risk of an arbitrage appraisal…
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Fair Value Not Based on the Merger Price, Part I of II This is a two-part article that focuses on the SWS Group Inc. case and the interplay between merger price and fair value. In earlier cases the Delaware Court of Chancery rejected a merger price indication in favor of its own discounted cash flow analysis. Yet, in the SWS Group, Inc., appraisal decision, instead of a decision supporting a higher fair value, the court ultimately found that the merger price was too high. This ruling highlights the risk of an arbitrage appraisal strategy and may give dissenting shareholders something…
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Dell Inc. engaged in a management buyout (“MBO”) in October 2013 that effectively took the Company private, leaving Michael Dell in control (75% of its stock) with a financial sponsor (25% of its stock). This week, Vice Chancellor J. Travis Laster of the Delaware Court of Chancery filed an opinion in In Re: Appraisal of Dell Inc. determining the fair value of the dissenters’ shares. This post looks to see who the “winners” and the “losers” were in the appraisal action, and in the transaction itself. Z. Christopher Mercer, Founder and CEO of Mercer Capital, explains. To read the full…