Valuation of private company shares: use market-based break-up or open-market estimate, disregarding special-buyer premium. Valuation of shares in a private company with restrictive articles requires first testing whether value is ascertainable by reference to the market value of the company's total assets, including goodwill; if so, the break-up method using market (not book) values applies. If not, shares are to be estimated at their open-market sale value subject to the articles, disregarding any premium from a special buyer. Cross-holdings among private companies may be valued by framing and solving algebraic equations, and yield- or profit-based methods may be used where break-up valuation is inapplicable.
Cases where this provision is explicitly mentioned in the judgment/order text; may not be exhaustive. To view the complete list of cases mentioning this section, Click here.
Provisions expressly mentioned in the judgment/order text.
Valuation of private company shares: use market-based break-up or open-market estimate, disregarding special-buyer premium.
Valuation of shares in a private company with restrictive articles requires first testing whether value is ascertainable by reference to the market value of the company's total assets, including goodwill; if so, the break-up method using market (not book) values applies. If not, shares are to be estimated at their open-market sale value subject to the articles, disregarding any premium from a special buyer. Cross-holdings among private companies may be valued by framing and solving algebraic equations, and yield- or profit-based methods may be used where break-up valuation is inapplicable.
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