In a recent Court of Chancery appraisal decision, In re ISN Software Appraisal Litigation, C.A. No. 8388-VCG (Del. Ch. Aug. 11), Vice Chancellor Glasscock relied upon the discounted cash flow (DCF) valuation method to value an entity whose stock was not traded publicly, lacked historical sales of its stock that were reliable indicators of fair value, and for which no comparable company evaluations existed.

The Court started its valuation analysis using the DCF framework of the expert of ISN Software Corp. because his valuation used the standard five-year cash flow projection period, which the Court had found appropriate. After making adjustments for inputs where the parties diverged, the court subsequently concluded that $98,783 per share, which far exceeded the merger consideration of $38,317 per share, was the fair value of ISN Software as of the date of the merger.

If you would like to speak to a litigator in Fox Rothschild’s Delaware office, please reach out to Sid Liebesman (302) 622-4237 or Seth Niederman (302) 622-4238.