5.6 Business Valuations in Legal Contexts

As you have seen, business valuation arises in a variety of legal contexs:

• Valuation of a family-owned business for estate tax purposes
• Valuation of a business in a corporate appraisal
• Valuation of an ongoing business in a bankruptcy proceeding
• Valuation of minority shares in case of "oppression"

5.6.1 - Estate tax

Typically, the estate will argue that shares in a closely-held family business should be discounted. (More 5.6.1>>)

5.6.2 - Corporate appraisal

When a minority shareholder dissents from a major corporate transaction (such as a merger), the shareholder can request that the court determine the value of his shares in a corporate appraisal proceeding. (More 5.6.2>>)

5.6.3 - Bankrutpcy

When a company is in bankrtupcy, the bankruptcy judge may have to decide whether to permit the business to continue or to have the business liquidated. The value of the on-going business is compared to its liquidation value. (More 5.6.3>>)

5.6.4 - Corporate "oppression"

Minority shareholders in close corporations can "exit" the business by showing that the controlling shareholders have acted "oppressively." The question then becomes what should be the "buyout price" that the controlling shareholders must pay the minority and when is the price determined. (More 5.6.4>>)

5.6.5 - Other

other (More 5.6.5>>)