Court Of Chancery Explains Valuation Technique Preferences

Posted on March 9, 2011 by Edward M. McNally

S. Muoio & Co. v. Hallmark Entertainment Investments Co., C.A. 4729-CC (March 9, 2011)

There are several different ways to value an enterprise.  For a while, discounted cash flow seemed to be the courts' preference.  Then when the markets were thought to be "efficient," market values were given weight.  This opinion is a good example of the curent state of flux where the Court is inclined to take into account all approaches, test to see if there are any outliers, look at the business realities involved and thoroughly analyze the parties' contentions before reaching a determination.  In short, it no longer is as simple as it once was and the new business world we live in seems to warrant  that approach.

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