Valuation Services: GHB Helps Reverse a Fraud by Correctly Valuing a Commercial Carpet Business

In a conflict of interest case, our GHB valuation and litigation specialist was retained as an expert by legal counsel representing the widow of the owner of a large commercial carpet installer. Her husband, in order to provide for his wife upon his death, had purchased life insurance to fund a buy-sell agreement with two key employees. However, the employees (who were also board members with fiduciary obligations) pocketed the insurance proceeds upon the owner's death. They then purchased the business from the widow for book value (only $40,000 after accelerated tax depreciation). Several years later, after the widow discovered the buy-sell agreement and insurance proceeds, she contacted an attorney. We determined that a marketability discount did not apply, and valued the fair value of the business, and the damages for self dealing, at over one half million dollars.

Contact us if you have valuation or litigation questions about mergers and acquisitions, damages and lost profits, business interruption and destruction, income tax transactions, estate and gift planning, employee ownership plans, patent infringement, marital dissolutions, personal injury, dissenting shareholder disputes, buy-sell agreements, or purchases of minority interests.