Editorial Type:
Article Category: Research Article
 | 
Online Publication Date: 01 Jan 2008

Misuse of Control Premiums in Delaware Appraisals

CFA
Page Range: 107 – 118
DOI: 10.5791/0882-2875-27.2.107
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Abstract

In statutory appraisal cases, Delaware Courts sometimes apply premiums that are based on questionable reasoning. They commonly adjust guideline company valuations for an “implicit minority discount”, they apply acquisition premiums to subsidiaries, and they often rely upon average premiums in acquisitions as a basis for calculating control premiums. This article discusses the flaws in the reasoning underlying these adjustments.

Copyright: © 2008 American Society of Appraisers

Contributor Notes

Gilbert E. Matthews, CFA, is Senior Managing Director and Chairman of Sutter Securities Incorporated in San Francisco, California. The writer gratefully acknowledges the contribution of Dr. Michelle Patterson and numerous others who offered helpful comments.

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