In re Appraisal of Orchard Enterprises, Inc.
Delaware Chancery Court
2012 WL 2923305 (2012)
The Orchard Enterprises, Inc. (Orchard) (defendant) merged with Dimensional Associates, LLC, which cashed out Orchard’s common stockholders (plaintiffs) at $2.05 per share. The stockholders brought an appraisal action, arguing that the value of the stock was $5.42 per share at the time of the merger. Orchard countered that the $2.05 price was a generous increase over the true price, $1.53. Both sides employed valuation experts, who arrived at different discount rates using both the capital asset pricing model (CAPM), which took market risk into account, and the build-up model, which factored in company-specific risk. CAPM had wider acceptance among academics and market players than the build-up model and its variants. However, due to Orchard’s relatively small size, the CAPM at issue was modified to include a size premium to account for the higher rate of return expected as compensation for the risk involved in the investment. The Delaware Chancery Court was thus tasked with determining the fair market value of the shares at the time of the merger.
Rule of Law
Holding and Reasoning (Strine, J.)
What to do next…
Unlock this case brief with a free (no-commitment) trial membership of Quimbee.
You’ll be in good company: Quimbee is one of the most widely used and trusted sites for law students, serving more than 707,000 law students since 2011. Some law schools—such as Yale, Berkeley, and Northwestern—even subscribe directly to Quimbee for all their law students.Unlock this case briefRead our student testimonials
Learn more about Quimbee’s unique (and proven) approach to achieving great grades at law school.
Quimbee is a company hell-bent on one thing: helping you get an “A” in every course you take in law school, so you can graduate at the top of your class and get a high-paying law job. We’re not just a study aid for law students; we’re the study aid for law students.Learn about our approachRead more about Quimbee
Here's why 707,000 law students have relied on our case briefs:
- Written by law professors and practitioners, not other law students. 44,500 briefs, keyed to 983 casebooks. Top-notch customer support.
- The right amount of information, includes the facts, issues, rule of law, holding and reasoning, and any concurrences and dissents.
- Access in your classes, works on your mobile and tablet. Massive library of related video lessons and high quality multiple-choice questions.
- Easy to use, uniform format for every case brief. Written in plain English, not in legalese. Our briefs summarize and simplify; they don’t just repeat the court’s language.