Dispute:
Charity plaintiffs alleged that defendants converted a significantly valuable company away from their charitable organization and paid excessive executive salaries. Defendants were the management group of the company, who orchestrated a complex sale/reorganization transaction resulting in management owning a majority interest. The appraised equity value at the time of the transaction was $23 million. After gaining control, management sold a division of the company 18 months later for $71 million.
Assignment:
The Oregon Department of Justice Charitable Activities Division engaged Serena Morones and her team to evaluate the reasonableness of the appraised value of the company at the transaction date. The Morones team was also asked to evaluate executive compensation and account for all profit distributions received by management.
Resolution:
Ms. Morones concluded and testified that the original appraisal was significantly understated. Ms. Morones concluded that at the transaction date, the company could have been sold for a strategic value of more than $100 million and the fair market value was also substantially higher than the appraised value. The judge concluded that the company could have been sold for at least $100 million and awarded appropriate damages to plaintiffs.
Media Coverage:
News Article: Eugene Register Guard
