Delaware Business Litigation Report

Court Of Chancery Allocates Value For Preferred Stcok

In Re: Appraisal Of The Orchard Enterprises Inc., C.A. 5713-CS (July 18, 2012)

One of the more difficult issues in appraisal litigation is how to allocate value between common and preferred stock.  Here the preferred stock was entitled to dividends on an as-converted basis and the Court used that forrmula to allocate the enterprise's value between the preferred and common stock.

The decision is also a primer on how to do a discounted cash flow valuation.

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