New Standards for Determining Stock Value for Dissenting Shareholders

The Tennessee Supreme Court has endorsed new methods for determining the value of stock for dissenting shareholders, clarifying that there is no single required approach to determining stock value under Tennessee law.

The case of Athlon Sports, Inc. v. Dugan, concerned minority stockholders who were forced out during a company merger.  The stockholders sued for the value of their business interests.  The trial court held that Tennessee case law required use of the “Delaware Block” method of valuing stock. Upon reviewing the case, the Tennessee Supreme Court determined that the Delaware Block method, which other jurisdictions have criticized as outdated, is not the only allowable method of valuation and that trial courts may use a variety of methods to establish value.

Read the Court’s press release regarding the case (with links to the unanimous opinion) here.