New cases added to Business Valuation Law
These new cases and others are being added to the Business Valuation Law database this week: Wilson v. Wilson, 2010 WL 4723461 (W. Va.)(Sept. 21, 2010) West Virginia Supreme Court finds that construction management fees, conditioned on completion of a project, are analogous to attorney contingency fee contracts and subject to same rules of equitable [...]
More evidence that certified business appraisers make better experts
R&R International v. Manzen, LLC, 2010 WL 3605234 (S.D. Fla.)(Sept. 12, 2010) There’s been a lot of attention focused on the intangible asset valuation issues in the Uniloc decision last week. But, another recent case highlights some major flaws in business valuation testimony presented by an investment banker–an expert witness with extensive industry knowledge, but who [...]
Butler Pinkerton Calculator passes a Daubert challenge
The BPC passed its first Daubert challenge in mid-December 2010 in Alamar Ranch, LLC v. County of Boise, a decision by the United States District Court (Idaho)(Civil Case No. 1:09-cv-00004 BLW). In response to the challenge, Peter Butler (Valtrend) submitted an affidavit listing the numerous instances of independent peer comments, articles, speaking engagements as evidence [...]
Redundancy in DLOMs may violate Daubert
Nancy Fannon (Fannon Valuation Group) recently told BVLaw Alert that “Dr. Robert Comment (Johns Hopkins University – Carey Business School) has written what I think is an important perspective regarding redundancy that exists in the large DLOM adjustments many appraisers take in their valuations.” The abstract from his paper “Business Valuation, DLOM and Daubert: The [...]
Valuing damages for breach of oral contract poses problems
Kia v. Imaging Sciences Internat’l, 2010 WL 3516850 (E.D. Pa.)(Sept. 2, 2010) This scene could have played out in countless startup companies—especially in the biotech sector—trying to recruit key personnel: During an employment interview in 2003, the plaintiff, a Ph.D. and one of the “world’s leading engineers” in digital imaging, rejected an initial salary offer [...]
U.S. Supreme Court approves amendments to Rule 26 FRCP, exempting draft expert reports from discovery
Earlier this year BVLaw Alert reported that a financial expert’s draft report would no longer be discoverable under proposed changes to Rule 26 of the Federal Rules of Civil Procedure (F.R.C.P.). Most recent update: On July 15, 2010, the U.S. Supreme Court ratified the proposed changes, including the key provisions that apply the work-product protections [...]
Daubert and Kumho Tire case digests added to BVLaw™
It’s been ten years since the U.S. Supreme Court expanded its ruling in Daubert v. Merrell Dow Pharmaceuticals, Inc. to all types of technical expert testimony—including financial experts and business appraisers—in Kumho Tire v. Carmichael. PriceWaterhouseCoopers has just released its new Daubert Challenges to Financial Experts: A Ten-year Study of Trends and Outcomes, 2000 to [...]
Should your expert update a 10-year old valuation report for current testimony?
Analyst Nilufer Usta posed this questions in a recent discussion on LinkedIn (note: you may have to join the BV Professionals group to access the thread). Over sixteen comments have been posted as of this moment, touching on the central topic (short answer: the report need only comply with the standards applicable as of the date of [...]
Expert’s discounted cash flow analysis fails Daubert test in Anheuser Busch case
Warren Distributing Co. v. InBev USA, LLC, 2010 WL 2179167 (D. N.J.)(May 28, 2010) In 2006, New Jersey passed the Malt Alcohol Beverage Practices Act—a “watershed moment in the history of brewer-distributor relationships … that led to a new world of rights and inherent value,” according to the federal district court. In particular, the law [...]
Bankruptcy decision rejects standard three-year income projections
Have you ever used a business’s three-year historical annual average to project sales and revenue growth, EBITDA or capital expenditures? Have you ever used the term “zone of insolvency” to describe a business on the brink of bankruptcy? Does your valuation report sometimes omit the precise formula used in your DCF? If you answered “yes” [...]
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