MBAF is pleased to present the May/June 2018 issue of Litigation & Valuation Report. Here’s a brief glance at what you’ll find in the May/June issue…

What Does the New Tax Law Mean for Business Valuation?

The Tax Cuts and Jobs Act (TCJA) is the most significant overhaul of the tax code in more than 30 years. In addition to cutting tax rates, the law adds, modifies and eliminates many business-related tax breaks, along with transitioning to a territorial tax system for corporations with foreign earnings. This article provides an overview of how the changes will affect the income and market approaches. A sidebar highlights how tax law changes will affect settlements that include sexual harassment and abuse claims.

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Patent Apportionment: Don’t Double Count Damages!

When calculating reasonable royalty damages in patent infringement cases, experts are often called upon to “apportion” the royalty base among multiple patents or between infringing and noninfringing products or product features. This article summarizes a federal district court case that excluded a damages expert’s testimony on Daubert grounds because her apportionment methodology improperly inflated the royalty base.

Finjan, Inc. v. Sophos, Inc., No. 14­cv­01197-WHO (N.D. Cal., Aug. 15, 2016)
Finjan, Inc. v. Sophos, Inc., No. 14­cv­01197-WHO, No. 324 (N.D. Cal. Sept. 8, 2016)

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Identity Crisis – How experts identify alter ego companies

Rather than give up on defendants that appear to have limited financial resources, plaintiffs may assert that the companies are nothing more than “alter egos” for more solvent companies. This article identifies various red flags of alter ego companies, such as combined corporate structures, shared advisors and numerous “related party” transactions. The existence of these factors may, in turn, persuade a court to “pierce the veil” of a corporation or limited liability company (LLC).

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Valuing Divestitures and Spinoffs

When a business sells or “spins off” one of its business units, adjustments may be needed to reflect changes in the newly independent company’s relationship with its former parent. This article highlights three control-related issues that may require valuation adjustments: management, intellectual property and transfer pricing.

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