Valuation

Minority Discount Wrong 

Marriage of Taylor 257 Mont. 122, 848 P.2d 478 (Mont. 1993). The bee farm case. Discounting minority shareholder value in a closely held corporation is inappropriate when the party’s interest is valued based on the underlying assets of the corporation, not the value of his or her stock.

When the corporation is burdened with debt to the relatives of a party, but the debt is not always or consistently reported on the company financials, proper for the trial court to ignore it.

Affirmed a cash award to the wife where husband complained on appeal she should have received stock. His family’s corporation had never declared a dividend. Awarding part of a minority interest in stock in a closely held corporation that had never declared a dividend to the other party is not something a trial court should do. 

Justice Trieweiller dissented, noting the both experts doubted the stock could be sold. He argued that wife should have gotten stock. Husband had essentially no assets other than the stock and the assets used to value the honey business arguably were needed by the husband to pay child support and support himself.

He argued that if it were marketable, she could sell it. If it were not marketable, then the value would be fairly divided.