In appraisal rights claims, the price paid in a merger may not represent “fair value,” especially when the deal involves related parties. This article summarizes a recent Delaware Chancery Court case, where the judge concluded that a deal price is only as reliable as the process that was used to negotiate the transaction. In the absence of a “competitive and fair auction,” the court will rely on other business valuation methods instead. John Douglas Dunmire v. Farmers & Merchants Bancorp of Western Pennsylvania, Inc., 2016 Del. Ch., C.A. No. 10589-CB, Nov. 10, 2016

Often, business valuations are based on estimates of expected cash flow, but it’s important to evaluate whether these estimates seem reasonable. This article explains the role that cash flow estimates play in valuing a business and the difference between forecasts and projections.