Law News - Valuation Takeaways

WesternGeco LLC v. ION Geophysial Corp. - Supreme Court allows recovery for lost foreign profits. The U.S. Supreme Court recently expanded the scope of damages under certain circumstances. The issue was whether the patent holder, which had proven a domestic act of infringement, was entitled to lost profits related to the use of components of a patented device outside the United States.
Athlon Sports Communications, Inc. v. Duggan (Athlon II) - Court overrules precedent requiring exclusive use of Delaware block method to determine fair value in dissenting shareholder cases; trial courts may use other, more “modern” methods, including forward-looking DCF analysis, state high court says and remands for reevaluation of earlier ruling.
Zaffarkhan v. Domesek - Appeals court upholds zero damages finding in dispute involving short-lived software startup, where plaintiff’s expert had no experience valuing software companies, misapprehended basic facts, and developed multi-million-dollar valuations for a company with no product, no revenue, and no investors.

The Tax Cuts and Jobs Act Impact

U of Penn Wharton School of Business Study projects that the Tax Cuts and Jobs Act (TCJA) will cause approximately 250,000 or 18.0 percent of U.S. business owners switch from pass-through entity to C-corporations to take advantage of sheltering their income from tax by converting to C-corporations. The biggest switchers are expected to include doctors, lawyers, and investors.

Industry Highlights – Healthcare Sector

US consumer prices for medical care commodities, an indicator of healthcare costs, increased 2.4% in June 2018 compared to the same period in 2017
US consumer prices for medical care services, an indicator of profitability for healthcare services, rose 2.5% in June 2018 compared to the same month in 2017
Revenue (in current dollars) for US health care, a sector that includes physicians, dentists, hospitals, home health care, nursing homes, and daycare services, is forecast to grow at an annual compounded rate of 6% between 2018 and 2022
Challenge: Shortage of Sterile Injectable Drugs - An ongoing shortage of sterile injectable drugs -- including opioids -- has left many US health care facilities scrambling to provide uninterrupted patient care. Some health care practitioners are trying alternative pain management products such as laughing gas, nonopioid painkillers, and trigger point injections. In an unprecedented move, the Food and Drug Administration is creating a task force to seek ways to minimize drug shortages
Industry opportunities include: Health Information Technology (HIT), personalized medicine, preventative medicine, tele-medicine, handheld technology, growth of non-insurance practices

September 2018 AVC Business Valuation Quick Read