{"id":1161,"date":"2016-01-11T17:01:32","date_gmt":"2016-01-11T22:01:32","guid":{"rendered":"http:\/\/events.lindabury.com\/?p=1161"},"modified":"2016-06-02T12:54:30","modified_gmt":"2016-06-02T16:54:30","slug":"shareholder-oppression-cases-expert-testimony-company-valuation-not-absolute","status":"publish","type":"post","link":"https:\/\/www.lindabury.com\/firm\/insights\/shareholder-oppression-cases-expert-testimony-company-valuation-not-absolute.html","title":{"rendered":"In Shareholder Oppression Cases, Expert Testimony on Company Valuation is Not Absolute"},"content":{"rendered":"<p>The New Jersey Appellate Division recently issued a ruling in a minority shareholder oppression case which reinforces the concept that the best way to resolve a minority shareholder oppression case is through settlement. The decision, <span style=\"text-decoration: underline;\">Wisniewski v. Walsh<\/span>, et al. (A-2650-13T3), is an unreported case but reaffirms that the finder of fact, whether it be jury or judge, is not bound by, or required to accept, the testimony of any expert and may, in fact, make its own determination of value, as long as it is based upon facts in the record.<\/p>\n<p><span style=\"text-decoration: underline;\">Wisniewski v. Walsh<\/span> is a case that has been in the courts for 20 years on a variety of legal issues. The issues in this particular ruling concerned whether a marketability or illiquidity discount had been imbedded in the valuation experts\u2019 determination of the value of the company and, if not, what discount should be applied. On a prior appeal the Appellate Division had ruled that Norbert Walsh, the oppressing shareholder, was to be bought out and that a marketability discount should be applied to the value of his shares to reduce the purchase price and ensure that he, as the oppressing shareholder, did not receive a windfall by having the purchasing shareholders bear the full burden of the company\u2019s illiquidity.<\/p>\n<p>In this case the dueling experts had used different methods of valuation, one had used a discounted cash flow method of valuation while the other had used a market approach, and the trial court during the valuation aspect of the case had found the discounted cash flow approach more reliable and sound and adopted the first expert\u2019s approach for valuation. The discounted cash flow approach involves estimating the company\u2019s revenues over a period of time, normalizing its expenses and then discounting the resulting income stream to a present value at an appropriate rate. When determining the valuation, the trial judge accepted the first expert\u2019s estimation of future revenues, but rejected his analysis of the company\u2019s expenses, adopting instead the second expert\u2019s approach to normalizing adjustments. The valuation trial judge then accepted the first expert\u2019s discount rate of 12% for purposes of determining the present value of the resulting income stream.<\/p>\n<div class=\"read_more_link\"><a href=\"https:\/\/www.lindabury.com\/firm\/insights\/shareholder-oppression-cases-expert-testimony-company-valuation-not-absolute.html\"  title=\"Continue Reading In Shareholder Oppression Cases, Expert Testimony on Company Valuation is Not Absolute\" class=\"more-link\">Continue Reading \u203a<\/a><\/div>\n","protected":false},"excerpt":{"rendered":"<p>Expert testimony in business valuation litigation is not necessarily determinative<\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[245,99,65,248],"tags":[],"coauthors":[173],"class_list":["post-1161","post","type-post","status-publish","format-standard","hentry","category-corporate-ma-insights","category-pierce","category-insights","category-litigation-insights"],"acf":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v27.4 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>In Shareholder Oppression Cases, Expert Testimony on Company Valuation is Not Absolute &#8212; January 11, 2016 &#8212; Lindabury, McCormick, Estabrook &amp; Cooper, P.C. 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