MPI is proud to announce that Stacy Statkus has joined the firm as a Senior Vice President. Ms. Statkus brings a unique skillset to MPI after more than 16 years of experience in the litigation consulting, forensic accounting and business valuation realm. Her areas of expertise include matrimonial litigation involving high net worth individuals, celebrities, professional athletes, CEO’s and other C-suite executives, as well as other business owners and their spouses. Ms. Statkus is routinely engaged to conduct tracing analyses of separate and marital property and to identify and quantify living expenses and income available for spousal and child support.
In a recent decision in New Jersey Superior Court involving cross claims of shareholder oppression pursuant to N.J.S.A. §14A:12-7, the Court found it appropriate to apply a marketability discount to the value of the privately-held company stock at issue in determining the buyout price to the oppressive shareholder.
There are many famous lines in the movie Caddyshack, the 1980 sports comedy film starring Chevy Chase, Rodney Dangerfield, Ted Knight and Bill Murray. Among them is the exchange between Angie and Carl (Bill Murray), where Carl is relaying a story about caddying in Tibet for the Dalai Lama. After the round, the Dalai Lama refuses to pay Carl for his work, saying, “There won’t be any money, but when you die, on your deathbed, you will receive total consciousness,” to which Carl replies, “So I got that goin’ for me, which is nice.”
The Delaware Court of Chancery recently determined the value of ISN Software Corporation stock to be $98,783 per share, 158% more than the merger price. ISN did not rely on a financial advisor, investment bank, or fairness opinion, but self-determined that its stock was fairly valued at $38,317 per share. Petitioners Polaris and Ad-Venture objected, and promptly filed suit.
In general, a fairness opinion is an analysis conducted by a third party valuation firm or investment bank that assesses whether the terms of a transaction are fair, from a financial point of view. If properly done, a fairness opinion is a powerful method to protect boards of directors, trustees and other corporate fiduciaries (collectively referred to herein as fiduciaries) from transaction-related liability. Unfortunately, too often, fiduciaries associate fairness opinions with acquisitions of large, public companies. Indeed, obtaining a fairness opinion is a best practice when considering a wide range of transactions, including minority redemptions, recapitalization, combinations and spin-offs, just to name a few. Moreover, a fiduciary’s duty of care is no less important when such transactions involve a closely-held company. Deeming fairness opinion studies too expensive, time consuming, or simply unnecessary, fiduciaries of privately held firms routinely engage in corporate transactions without relying on them. In reality, however, these same fiduciaries may, in fact, be more at risk than their publicly traded counterparts due to heightened appearances of conflicts of interest and self-dealing.
After more than a year of speculation and rumors, on August 4, the Internal Revenue Service (“IRS”) issued proposed regulations under Internal Revenue Code §2704 (the “Proposed Regs”). Clearly, the goal of the Proposed Regs is to limit (or eliminate outright) the application of discounts for lack of control and lack of marketability when valuing interests in family controlled entities for gift, estate and generation-skipping tax purposes.