EXPERT WHITNESS TESTIMONY
Appraisal Economics Inc. has provided expert witness testimony at a binding arbitration hearing in New York. One of two general partners in a limited partnership died, and the value of the interest was disputed between the remaining general partner and the estate of the deceased general partner. The partnership owns a long-term leasehold interest in commercial real estate. As the partnership is a holding entity, we used the net asset value approach, in which we marked the partnership’s assets and liabilities to fair market value and computed the value that would be received by a holder of the interest upon the sale of the property and liquidation of the partnership. We also used the income approach, in which we calculated the present value of the projected future cash flows to the subject interest if the partnership was continued. Our analysis also involved selecting appropriate discounts for lack of control and lack of marketability that were supported by our consideration of the rights, restrictions, and other factors specified in the partnership agreement.
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NATURAL GAS TURBINES
Appraisal Economics Inc. has completed a valuation of over a dozen natural gas turbines located throughout the United States. The assets are owned by a publicly traded power company with a market capitalization of over $200 billion, and each unit is capable of generating between 23 megawatts and 55 megawatts of electricity. The natural gas turbines are part of a lease pool used by electricity generators that require backup units when their primary turbines are undergoing repair. Appraisal Economics was engaged to estimate the fair market value of the assets for financing purposes.
PURCHASE PRICE ALLOCATION OF A PET FOOD MANUFACTURING COMPANY
Appraisal Economics Inc. has valued the tangible and intangible assets of a pet food manufacturer acquired as part of a private equity roll-up. The acquired company sells baked pet treat products to wholesale pet food distributors, manufacturers, and retailers across the United States. The company operates a 200,000-square foot facility with multiple independent production and packaging lines. The acquisition involved a complex series of direct and indirect transactions of equity interests by another pet food company that was previously acquired by the private equity firm. Appraisal Economics was engaged to allocate the aggregate purchase price among the financial, tangible, and intangible assets of the company, including the real property, machinery and equipment, trade name, non-compete agreement, customer relationships, and goodwill.
EQUITY IN A PRIVATELY HELD INTERNATIONAL CONGLOMERATE
Appraisal Economics Inc. valued a non-controlling interest in a holding company that owns a minority interest in a privately held international conglomerate that is headquartered in Russia. The operating company has several dozen subsidiaries in Europe and Asia that specialize in oil and gas, construction, telecommunications, and finance. Our valuation included analyzing the recent sale between third parties of shares of common stock in the underlying operating company. To determine the current value of the operating company’s common stock, we adjusted for changes in the company’s financial performance, industry and economic conditions, and currency exchange rates. The concluded value of the interest in the holding company that owns the conglomerate’s shares reflected incremental discounts for lack of control and lack of marketability. Our valuation was used for gift and estate tax planning purposes.