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  What is “Fair Value” Anyway?

The definition of value is critical to the correct application of the law, especially in the case of shareholder dissent or minority oppression actions. Fair Value has seldom been defined clearly in statute, and can vary from jurisdiction to jurisdiction.

The revised Model Business Corporation Act defines Fair Value as “The value of the shares just before the effectuation of the corporate action to which the shareholder objects, excluding any appreciation or depreciation in anticipation of the corporate action unless exclusion would be inequitable.

California has not adopted this definition officially. In most applications Corp Code §2000 in interpreted to require the appraisers to apply most of the common elements of the Fair Market Value standard - willing knowledgeable seller, willing knowledgeable buyer - but to value the shares without regard to their minority status. In other words to use the same per share value as a controlling interest would have.

 
   
Business Valuation Articles
 
 
  Good Business Intermediaries Can Attract the Right Investors
  Marketability Misconceptions
  More Marketability Misconceptions
 
 
  Selecting a Business Appraisal Firm
  Forensic Accounting in Divorce Matters
  Standard of Value is Everything!
  Why is the Date of Valuation Important?
  In re: Marriage of Duncan
  Why do we take a Minority Discount?
  What’s the Difference Between a Control Premium and a Minority Discount?
 
What is “Fair Value” Anyway?
  Mart v. Severson
  ABCs of Appraiser Credentials
  “Core Earnings” Measure Alters Landscape
  What is USPAP?
  How much Should a Business Appraisal Cost?
  What is Investment Value Anyway?
  Mediation-Valuation gives parties opportunity to “work-through” valuation to reach compromise
  What is Forensic Accounting?
  Current Lessons for U.S. Equity Investors
  Apportionment Methods - Pereira-VanCamp
  Highest and Best Use..
  Minority Shareholder Oppression – Fraud Investigation
  What's Real?
  Report Types and Level of Service
  Testimony and the Valuation Expert
  The Art of the Deal
  INC. Magazine article: What is your company worth NOW?
 
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