S.C. Supreme Court Considers Appropriate Application of the "Income Approach" Valuation in Dissolution Action
The South Carolina Supreme Court determined that an appraiser report lacking "normalization adjustments" failed to meet the valuation standards agreed to by the parties, and warranted reversal of the trial court's order approving the valuation. In Blackburn v. TKT and Associates , two corporate shareholders filed a dissolution action alleging that two other shareholders were inappropriately taking the profits of the corporation in the form of excessive salaries. Following a bench trial, the trial court agreed that the defendant shareholders had "improperly drained the assets" of the corporation, determined that the defendant shareholders should pay plaintiff shareholders the fair value of their shares, and ordered an appraisal. The parties chose an appraiser, and selected the "income approach" method for valuing the corporation. The terms of the appraiser's engagement further provided that the appraisal would be done in accordance with the S