Implied minority discounts: not just a Delaware problem
A recent case in federal district court demonstrates the confusion that still clouds the concept of an implied minority discount. In Kaplan v. First Hartford Corp., 2009 WL 737681 (D. Me. 2009), a statutory fair value appraisal action, the company’s expert argued strongly in support of an implied minority discount (IMD): I understand that the [...]
Implied minority discounts: why the courts won’t let it die
One of the problems with precedent-based jurisprudence is that it can be slow to understand new practices, even when new applications have gained common acceptance by experts in the field. Such is the case with the current doctrine of implied minority discounts (IMD) in statutory appraisal law. “The IMD posits that, no matter how liquid [...]
Did Shannon Pratt implant the implied minority discount “weed” at the Delaware Chancery Court?
The IMD first appeared in Delaware Chancery cases in 1992 and 1995, but didn’t become entrenched until LeBeau v. M.G. Bancorporation (1998 Del. Ch. LEXIS 9), when the majority shareholders hired Shannon Pratt. In arguing for the application of the IMD, the dissenters pointed to an excerpt from Pratt’s Valuing a Business (3rd ed.1996), which [...]
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