Best Practices For Valuing Preferred Stock

Law360, New York (November 21, 2013, 8:18 PM EST) -- In a July 2012 decision (In re: Appraisal of the Orchard Enterprises Inc.), the Delaware Chancery Court found that the value of preferred stock should be limited to its “as-converted” value. In that case, the plaintiff argued for an “as-converted basis” while the defendants argued for liquidation preference. The basis for the court’s decision rests in the subjectivity of a subsequent transaction that the court found would be necessary in order to trigger the liquidation preference. In this article, we review preferred stock securities, an analysis...
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