Statutory Fair Value in Dissenting Shareholder Cases: Part I

The predominant standard of value employed by state courts to determine the value of minority shares in appraisal cases is fair value, which is determined by state law. In most states, fair value is the shareholder's pro rata portion of the value of a company's equity. This measure of value differs from fair market value, third-party sale value, and fair value for GAAP purposes. This article discusses the valuation approaches accepted by the courts, focusing on the Delaware courts' views as to how fair value is assessed, and contrasts Delaware's views with those of other jurisdictions that differ from Delaware in their approach to fair value.