Category: Member Buy-outs

BUY-SELLS

By , December 2, 2016 10:16 am

The post under the link below contains a brief but good discussion of buy-sells.  It applies equally to LLC and corporate buy-sells.

Here’s the link:

http://www.lexology.com/library/detail.aspx?g=0d4fbc77-178b-405b-bf4b-05496125664c&utm_source=lexology+daily+newsfeed&utm_medium=html+email+-+body+-+general+section&utm_campaign=lexology+subscriber+daily+feed&utm_content=lexology+daily+newsfeed+2016-09-30&utm_term=

NEW DELAWARE CASE ABOUT VALUING COMPANIES

By , September 9, 2016 9:48 am

In drafting buy-out provisions in LLC operating agreements and in assisting LLC clients in sales of membership rights post-formation, LLC lawyers need a solid theoretical knowledge of the art and science of business valuation.  The post under the link below link provides a brief but useful introduction to DFC Global Corp., a decision by the Delaware Court of Chancery issued on July 8, 2016.  DFC provides a very detailed (68-page) discussion and general critique of what the court views as the three main methods for making these valuations.

Here’s the link:  http://courts.delaware.gov/Opinions/Download.aspx?id=243400

THE ROMANOFF CASE–A NY VALUATION CASE IN WHICH VALUATION OF GOODWILL IS KEY

By , July 29, 2016 11:15 am

In the discussion of goodwill valuation under the link below, Peter Mahler provides an excellent discussion of goodwill valuation that is central of the above case.  The case is a NY case, but the doctrine on which it is based applies also in many other jurisdictions.

Here is the link:

http://www.nybusinessdivorce.com/2016/06/articles/limited-liability-partnerships/avoid-bad-blood-goodwill-professional-partnership-valuations/

PETER MAHLER/CHRIS MERCER PODCAST ABOUT DISCOUNT VALUATIONS

By , July 20, 2016 12:44 pm

For those of you who are interested in understanding marketability discounts in depth, here is the link to the above podcast:

http://www.nybusinessdivorce.com/2016/06/articles/valuation-discounts/chris-mercer-marketability-discount-part-2-podcast-interview/

MINORITY DISCOUNTS

By , June 16, 2016 2:03 pm

LLC lawyers often have to advise their clients about minority discounts of the value of their membership rights when these lawyers are forming LLCs for their clients and negotiating the terms of their operating agreements; when they are negotiating member buy-outs; and on many other occasions when disputes about discounts arise among the members.  The post by Peter Mahler under the link below addresses a recent New York partnership case, called Congel v. Malfitano, in which the court imposed an enormous 66% minority discount on the value of a partnership interest of a partner who wrongfully dissolved the partner’s partnership.  I can envision more than a few circumstances in which I’ll want to cite the Congel case in LLC negotiations.

Here is the link:

http://www.nybusinessdivorce.com/2016/05/articles/buyout/partner-wrongfully-dissolved-partnership-hit-whopping-66-minority-discount/#

NEW PODCAST ABOUT BUSINESS VALUATION MARKETABILITY DISCOUNTS

By , June 14, 2016 2:49 pm

In drafting operating agreements and in other situations, LLC formation lawyers need at least a basic understanding of how to value businesses and about the importance of marketability discounts and other discounts in these valuations.  In his excellent blog entitled “New York Business Divorce,” Peter Mahler has recently begun to provide  podcast interviews concerning that topic and other topics relevant to his blog.  (I happen to be one of his interviewees, and he will publish our podcast interview on the subject of LLC deadlocks in a few weeks.)

If you are interested in learning more about marketability discounts in business valuations, you can’t do better than to listen to the podcast under the following link:

http://www.nybusinessdivorce.com/2016/06/articles/valuation-discounts/announcing-business-divorce-roundtable-podcast/#more-17032

DISCOUNT FOR MARKETABILITY

By , April 26, 2016 10:49 am

For an account of the origin of the theory underlying discounts for marketability under New York law that is both sophisticated and, believe it or not, charming, click here: http://www.nybusinessdivorce.com/2016/04/articles/valuation-discounts/the-birthing-of-new-yorks-marketability-discount-in-fair-value-cases-a-family-affair/.

NEW PETER MAHLER POST ON DLOM

By , March 18, 2016 9:33 am

Here is another fine new post by Peter Mahler on how to set discounts for lack of marketability:

http://www.nybusinessdivorce.com/2016/02/articles/valuation/court-applies-25-marketability-discount-despite-strong-indicators-of-liquidity/

VALUING A PUT RIGHT BUYOUT

By , March 10, 2016 9:32 am

Put-right and call-right buy-out provisions in LLC operating agreements are, needless to say, central provisions of these agreements.  The case cited and discussed in the article cited below amply illustrates this point.

31 No. 12 Westlaw Journal Delaware Corporation Law Update 4
Westlaw Journal Delaware Corporation Law Update
February 4, 2016
PECO LOGISTICS LLC V. WALNUT INVESTMENT PARTNERS LP
Copyright © 2016 Thomson Reuters

Investors in a Delaware limited liability company have failed to convince a Chancery Court judge that the process by which their units were valued when they exercised a put right violated implied terms in the controlling LLC agreement.

Peco Logistics LLC v. Walnut Investment Partners LP et al., No. 9978-CB, 2015 WL 9488249, Delaware Chancery Court memo opinion, submitted Oct. 6, 2015, decided Dec. 30, 2015. (Chancellor Bouchard)

NEW BLOG POST BY PETER MAHLER ON DISCOUNTS FOR LACK OF MARKETABILITY

By , February 29, 2016 11:43 am

The discussion under the link below in Peter Mahler’s excellent new blog post on discounts of the value of interests in closely held businesses for lack of marketability focuses on NY law, but its ideas apply in all states; and they are important not only in valuation litigation but also in planning and drafting buy-sell provisions in the owner agreements of LLCs and other closely held businesses.

Here’s the link:

http://www.nybusinessdivorce.com/2016/01/articles/valuation/the-dlom-debate-heats-up/#more-15668