Ferolito v. AriZona Beverages USA LLC – Are marketability discounts warranted in fair value litigation?

Description

Abstract: This article looks at a recent case involving a dispute between the two equal owners of AriZona Beverages USA LLC (AriZona), the largest privately owned beverage company in the United States, and addresses several valuation issues that arose in the dispute. In establishing the fair value of a 50% interest in AriZona, the New York Supreme Court (Nassau County) determined that the discounted cash flow method was the only reliable valuation method and set the discount for lack of marketability at 25%. This high-profile case also spotlights a few factors to consider when addressing marketability.