HEALTH CARE AND PHARMACEUTICALS
We were retained by the Internal Revenue Service to estimate the fair market value of the assets of a large home health agency. The agency, operated as a tax-exempt entity at the time, was converted to a for-profit entity, with ownership control transferring to founding management and related parties. In the first-ever Section 4958 "excess benefit" transaction tried in the U.S. Tax Court, the Court ruled that management and related parties, as "disqualified persons," received an excess benefit. The excess benefit was the result of effecting the transfer solely through the management assumption of the agency liabilities.
We were retained by a tax-exempt research organization to render a fairness opinion. The proposed transaction involved the sale of substantially all of the operating assets of the organization to another tax-exempt research company. The transaction included a lease-purchase option term granting the buyer the right to acquire the seller's building-at fair market value-after a fixed number of years. Based on the seller's tax-exempt status, the transaction was required to comply with the private benefit and private inurement provisions of Internal Revenue Code Section 501(c)(3). These provisions prohibit the transfer of assets by a tax-exempt entity for consideration less than the fair market value of the assets transferred. This prohibition is in effect even if the buyer is also a tax-exempt entity.
We were retained by a tax-exempt university that operated an academic medical center to render a fairness opinion. The fairness opinion related to a contribution of the assets of a private hospital to a joint venture. The joint venture was owned by the university and a publicly traded hospital corporation. The acceptance of the private hospital assets contribution would result in the dilution of the university's ownership interest in the joint venture. The potential overvaluation of the hospital assets contribution to the joint venture could result in private benefit and private inurement. This would result from the excessive dilution of the university's ownership interest in the joint venture.
We were retained by a large, not-for-profit health care system to render a fairness opinion. The fairness opinion related to the sale of substantially all of the assets of the home health and infusion services divisions of the system to a publicly traded company. The transaction included a covenant-not-to-compete agreement from the selling health system with regard to the home health and infusion services markets.
SPORTS AND ENTERTAINMENT INDUSTRY
We provided valuation advisory services to a professional basketball franchise owner as part of a sophisticated estate plan and business succession plan. To assist our client with his overall estate planning objectives, our analysts estimated the value of both the NBA franchise and a partial ownership interest in the franchise.
OTHER INDUSTRIES
Telecommunications industry
We provided valuation consulting and financial advisory services to a privately held, mid-size communications holding company. Our valuation opinion was used for management planning purposes in conjunction with the restructuring of the company's equity ownership. Our analysis included the valuation of the holding company's (1) incumbent local exchange carrier (ILEC) wireline company, (2) emerging wireless company (including a cellular division and a PSC division), and (3) broadcasting company. Our analysis also involved the valuation of specific intangible assets held by the wireless company, including its FCC licenses.
Utilities
Our client owned a water distribution company in suburban Maryland. The local municipality exercised its legal right of eminent domain. The investor-owned utility (IOU) and the condemning municipality could not agree on a negotiated fair market value of the assets subject to the taking. The matter was decided by a jury trial. Our analysts testified that the municipality's appraiser did not consider the value of the water system's intangible assets, including computer software, books and records, customer relationships, system maps and engineering drawings, and licenses and permits. The jury agreed with our analyst's expert testimony and awarded to the IOU the value of the water system intangible assets.
For an electric generation facility in New York, the taxing authority assessed the property based on a recent acquisition price. Our client was the corporate acquirer, a publicly traded energy company. We valued the discrete intangible assets of the acquired electric generation facility, including power purchase and sale contracts, environmental credits, and operating manuals and procedures. After an audit of our valuation, the taxing authority reduced the amount of the assessments by the amount of the tax-exempt intangible assets.
Real estate development
In the Bankruptcy Court, we testified as to the fair market value of a Florida residential real estate developer. A principal dispute in this bankruptcy matter involved the proposed plan of reorganization. Specifically, the principal dispute regarding the proposed plan of reorganization related to the value of the DIP business enterprise on a going-concern basis versus the value of the DIP business enterprise on an orderly liquidation basis.
Hospitality
Our client was a partnership that owned a hotel near the Minneapolis airport. The general partner constructed and contributed the hotel to the partnership. A limited partner contributed the adjoining undeveloped property. That property was improved and used as the principal guest parking lot for the hotel. The limited partner withdrew from the partnership, causing the distribution of the parking property from the partnership to the partner. The partnership sued the limited partner for breach of contract and other claims. We quantified the economic damages to the hotel business enterprise related to the loss of an adequate parking facility.
Financial services
Pacific Guardian Life Insurance Company was majority owned by a Japanese financial services institution. Through the implementation of a reverse stock split, the Japanese parent corporation cashed out all of the minority stockholders. Certain stockholders exercised their dissenting shareholder appraisal rights. Our analysts independently estimated the fair value of the Pacific Guardian stock in support of the parent company's cash out price. And, our analysts provided expert testimony in state court in support of our fair value appraisal.
Energy and natural resources industry
We were retained by a leading oil and gas exploration and production company located in eastern Texas. The purpose of the engagement was twofold. First, our analysts assisted in the structuring of a newly formed services company. The services company was created to provide management, administrative, and other services to the primary operating company. As part of this structuring, our analysts estimated the fair, arm's-length intercompany transfer price for the services to be performed by the services company. Second, our analysts estimated the fair market value of an ownership interest in the operating company, following the restructuring, for gift tax planning purposes. Our valuation included an analysis of the operating company's oil and gas properties, related production equipment, and investments in other privately held ventures.
hile Willamette Management Associates analysts are experienced in the valuation and analysis of businesses, business interests, debt and equity securities, intangible assets and intellectual properties, and special purpose properties in virtually every industry, many of our analysts have developed particular expertise in the following areas:
SAMPLE ENGAGEMENTS