Business Corporation Law

“Fair value is determined pursuant to Business Corporation Law § 623 (h) (4), which permits the court to consider “all other relevant factors” in determining fair value. As the Court of Appeals opined in Matter of Cawley v SCM Corp. (72 NY2d at 471-472), by including the phrase “all other relevant factors,” Matter of Murphy v United States Dredging Corp. 2010 NY Slip Op 04794 [74 AD3d 815]

“The Court may consider the company’s past performance as well as future events that are “known or susceptible of proof” as of the valuation date. Murphy v. U.S. Dredging Corp., 74 A.D.3d 815 (2d Dept. 2010), quoting Matter of Miller Bros. Indus, v. Lazy Riv. Co., 272 A.D.2d  166, 168 (1 Dept. 2000) (internal quotation marks omitted). But the Court must not speculate about the company’s future performance. See Matter of Cohen168 Misc. 2d 91 (Sup. Ct. N.Y. Co. 1995); aff’d, 240 A.D.2d 225 (1 Dept. 1997).” Ferolito v. Ariz. Beverages USA LLC 2014 N.Y. Slip Op. 32830 (N.Y. Sup. Ct. 2014)

“Case law held that fair value was determined by considering, as of the date of merger, net asset value, investment value and market value, and according weight to each as the facts and circumstances of a particular case dictated (Matter of Endicott Johnson Corp. v Bade, supra, at 587; Klurfeld v Equity Enters., 79 AD2d 124, 137). To assure that fair value determinations reflected the business realities of a given corporate action, the Legislature in 1982 amended paragraph (4) of Business Corporation Law § 623 (h) to provide a more expansive and flexible case-by-case approach to the valuation of shares (see, L 1982, ch 202, § 1; Bill Jacket, L 1982, ch 202, at 18-19). In fixing fair value under the statute as amended, courts must examine “the nature of the transaction giving rise to the shareholder’s right to receive payment for shares and its effects on the corporation and its shareholders, the concepts and methods then customary in the relevant securities and financial markets for determining fair value of shares of a corporation engaging in a similar transaction under comparable circumstances and all other relevant factors” (Business Corporation Law § 623 [h] [4] [emphasis added]).” MATTER OF CAWLEY v. SCM Corp. 72 N.Y.2d 465 (1988)


“The value of the corporation should be determined on the basis of what a willing purchaser, in an arm’s length transaction, would offer for the corporation as an operating business, rather than as a business in the process of liquidation ( see, e.g., Matter of Fulton, supra; Matter of Behrens, supra).” Matter Blake v. Blake Agency 107 A.D.2d 139 (N.Y. App. Div. 1985)


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