In 'Surgem,' court says 'no!' to calculation report

Ain't nothing like the real thing. "Calculations of value" have their place, but not in litigation, as a recent New Jersey case arising out of a shareholder dispute affirms. The points of contention between the parties were the fair value of the plaintiff's company and the defendant's minority interest in it, which the plaintiff wanted to buy back. The plaintiff retained an expert who did a "real" valuation of the company and determined the defendant's share was worth $368,700. The defendant offered expert testimony to support his claim that he should receive $10 for each of 270,000 membership units in the company. However, his appraiser's statements did not help the case. The expert said he was only hired to do a "calculation of value" but never an actual fair valuation of the company; for a full appraisal, "more work should have been done." He also did not say that the defendant had a right to get $10.00 per share.

 

The trial court rejected his statements. He did not appraise the company's fair value, it said. Rather, he did a calculation following the method the defendant determined. This ruling left the plaintiff expert's testimony uncontested. The appellate court was equally unreceptive to the defendant's claims.