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Contents
Quick Links to SC&H Group, LLC
2009 MSBA Conference We were excited to see everyone at the 2009 Annual MSBA Conference in Ocean City. If you didn't get a chance to meet us in person, please give us a call. We would be happy to discuss any valuation issues that your clients are contemplating. Congratulations to Scott Wilson from Miles & Stockbridge who was the winner of our $100 American Express Gift Certificate drawing. Valuation and Estate Planning in the Current Environment The challenging economic environment has negatively affected many owners of privately-held businesses over the last 12 months. However, it has also created a unique estate planning opportunity for business owners who may be subject to estate taxes in the future. Due to these economic conditions, the values of many privately-held businesses and other assets have declined significantly due to:
As a result of these temporary declines in the value, business owners can use a variety of techniques to pass stock and other income producing assets to their heirs at a fraction of the long term value of those assets. In combination with the observed declines in the value of many assets, the low interest rate environment further contributes to the attractiveness of certain estate planning vehicles such as:
Our experienced valuation and estate planning experts are available to discuss these opportunities with you and guide you through the process of setting up estate plans and properly valuing interests for estate planning purposes. For more information about our Business Valuation practice, email BVLS@SCandH.com or call (410) 403-1500 | (800) 832-3008.
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Valuations Insights, Third Quarter, 2009 Court Considers Applying Attorney-Client Privilege to Expert Communications Sieger v. Zak, 2009 WL 562988 (N.Y.A.D. 2 Dept.) March 3, 2009
During this past year, the Judicial Conference's Advisory Committees on Appellate Rules, Bankruptcy Rules, Civil Rules, Criminal Rules, and Evidence Rules has been soliciting public comment on two proposed amendments to the Federal Rules of Civil Procedure (FRCP):
The public comment period closed in February 2009 and it is not clear how long the amendments will be under advisement. Still, this recent opinion from New York's Appellate Division highlights the continuing debate over whether communications between litigation experts and attorneys should be protected by the attorney work-product or similar privilege. Minority shareholders accuse appraiser of collusion. When two minority shareholders wanted to liquidate their interest in a New York corporation, the sole remaining majority shareholder/CEO engaged a business appraiser to value the company. Based on his recommendations, the minority shareholders agreed to sell their collective interests to the majority owner for $3 million. (The appellate court opinion does not specify the percentages owned by the various shareholders.) Two years later, the company sold for more than $28 million and the minority shareholders sued, claiming that the CEO and the appraiser fraudulently misrepresented the value of the company. During discovery, plaintiffs tried to compel production of communications among the CEO, the appraiser, and the company's attorneys, concerning the minority stock transaction and purchase agreement. The defendants claimed that the communications were subject to attorney-client privilege and the trial court agreed, but ordered disclosure of some of the requested documents under a fraud exception. On appeal, the New York court affirmed disclosure on alternate grounds. "Here, all of the communications that the defendants claim are privileged were made by and between [the appraiser] and attorneys employed by [the company]." The appraiser was not an agent or employee of the company, nor was he a client of defense counsel. Accordingly, none of the requested communications was subject to the attorney-client privilege, the court ruled, and ordered their disclosure.
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