Samvit Ramadurgam v. Destiny XYZ Inc.
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Background
BRG was retained by Gibson Dunn & Crutcher LLP on behalf of the co-founder of an investment company being squeezed out of the company. The engagement involved evaluating the fairness of the transaction price by critiquing the defendants’ valuation and developing an independent valuation.
Our Approach
Eric Madsen, CFA, CPA, ABV, served as the plaintiff’s testifying valuation expert. His analysis identified significant flaws in the defendants’ valuation, including treatment of the company’s announced share giveaway, the valuation of its SAFEs (Simple Agreements for Future Equity), and the absence of an appropriate control premium.
Outcome
The Delaware Chancery Court ruled in the plaintiff’s favor, finding the squeeze-out unfair and the transaction price materially understated. The Court imposed a constructive trust that effectively restored the value of the plaintiff’s approximately one-third ownership interest in the company, which controls an investment fund with a public market capitalization of approximately $700 million. The opinion also credited Mr. Madsen’s analysis, stating that it “usefully identified the value drivers that the [defendant’s valuation] report discounted or missed.”
Team
Eric Madsen, Megan Jack, Quinn Burnett, Kimiko Hayashi
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