For those who have a stake in a matter involving the valuation of a privately held company, it is imperative to retain a business valuation litigation team with skills matched in both complex business litigation and the intricacies of business valuation.
At Rhoades McKee, our business-valuation lawyers offer a unique skill-set, not found in other firms, which bridges the chasm between finance and the law. Paul McCarthy earned both a BBA and MBA in Finance. Stephen Hulst has completed comprehensive course work offered by both the American Institute of Certified Public Accountants (AICPA) and the American Society of Appraisers (ASA).
In addition, as a comprehensive, full-service firm, our team readily consults with other Rhoades McKee attorneys that are also CPAs and tax attorneys. This specialized and concentrated skill set in one team provides our clients with a unique advantage and a cost-effective approach to protect the value of the business and their interest therein.
We represent clients in a host of contexts where a central issue is the value of a private company, including:
- Corporations with respect to shareholder and governance issues;
- Shareholders looking to exit companies who either have or lack liquidity rights;
- Families in multi-generational businesses;
- Parties involved in divorce actions where an interest in a company is subject to marital division;
- Companies in post-acquisition disputes;
- Officers, directors, or shareholders in oppression litigation, dissenters’ rights actions, or actions involving breach of fiduciary duties;
- Trade secret litigation; and
- Trustees and beneficiaries of trusts holding privately held interests.
Our efforts and representation of Michigan businesses has earned the respect and recognition of our peers. Many of our representative matters have earned us high rankings in both US News Best Lawyers and Chambers and Partners, an organization that has been ranking lawyers since 1990 and employs 150 full-time editors and researchers to evaluate law firms across the United States on a yearly basis.
Successful Outcomes in Business Valuation Litigation
- Valuation Expertise: A shareholder retained us to help deal with a fellow threatening shareholder who was interfering with the business – a situation that looked certain to end up in Court. But, utilizing corporate counsel, we held a number of mediation sessions to negotiate our client’s exit (or, alternatively, his acquisition) from the company. After engaging a valuation firm, we understood a range of value for the company and negotiated a deal under which the fair market value of the opposing party’s 50% interest would be determined by two valuation firms. The valuations came in millions lower than the opposing shareholder anticipated because he failed to appreciate the application of valuation discounts and the flow-through nature of income. Because the opposing shareholder did not have the financial ability to buy out our client, we negotiated the redemption of the opposing shareholder’s interests. The buy out was completed within approximately six months of our engagement – a great outcome that also avoided the delay and expense of shareholder litigation.
- True Fair Value: Our client came to us after receiving notice that the corporation in which she was a shareholder had merged and froze her out, claiming to buy out her ownership interest for fair value. Demanding that the corporation produce the records surrounding the merger, digging into the details of the transaction, and exposing problems with the merger, we were able to negotiate a higher and more fair buy-out price for the client.
- Avoiding Shareholder Litigation: Shareholder disputes often erupt when shareholders fail to address succession appropriately, either by way of governance documents or through personal dialogue. With expertise in business valuation, we helped two sets of 50/50 shareholders reach agreements for succession, including specific valuation protocols and the terms of the ultimate agreements, and avoided very costly shareholder litigation and the resulting harm to the companies and human relationships.