A BETTER CASE
Consulting
Forensic
Fraud
Infringement Damages
Michael L. Haynie is a principal with Manier & Herod in Nashville. For over 20 years, he has specialized in representing employers and insurers in workers’ compensation claims.
Mr. Haynie graduated cum laude with a Bachelor of Arts from Auburn University and earned his Juris Doctor from Nova Southeastern University in Fort Lauderdale, Florida. Mr. Haynie is admitted to practice law in Tennessee and Florida. He may be reached at mhaynie@manierherod.com
A Year of Excitement and Nostalgia
Nostalgia is the delicate thread that ties our present to the moments we’ve cherished in the past. – unknown. 2024 has been an exciting and nostalgic year for TDLA. Thanks to the hard work of our Executive Director, Mary Gadd, as well as leadership and active members, TDLA continues to grow and prosper.
TDLA’s engagement as amicus in cases with issues of significant importance to membership has increased significantly. This would not be possible without the time and effort of our Amicus Committee, comprised of James Creswell, Devin Lyon, Chancey Miller, Derek Mullins, and Jeff Nicoson, as well as those who have authored amicus briefs on TDLA’s behalf. Their hard work elevates TDLA’s presence and clout in the legal community and brings additional value to TDLA membership. This is just one of many ways to get involved in TDLA.
If you encounter a case involving legal issues meriting TDLA’s involvement as amicus, please contact TDLA’s Executive Director, Mary Gadd. Mary has done a masterful job of keeping the increased amicus activity on track.
In June, we had our annual summer meeting in conjunction with the Alabama Defense Lawyers Association (ADLA). This year’s meeting was at the newly renovated Perdido Beach Resort in Orange Beach, Alabama. We were treated to excellent CLE programming, thanks to Drew Plunk, the meeting chair, while also getting sand between our toes at sunset. Returning to Orange Beach was nostalgic in many ways. Some of you may recall the days when TDLA routinely had its summer meeting at Perdido Beach Resort. We plan to be back next year.
Speaking of nostalgia, we are going back to Keenland! For our Annual Meeting, we have partnered with Kentucky Defense Counsel (KDC) for a joint meeting in Lexington, Kentucky, from October 9 through 12, 2024. Inaugural Nathan E. Shelby Emerging Leaders Award recipient, AJ Parker, is serving as meeting chair, and we have outstanding CLE programming scheduled, along with other fun activities. It is not too late to register and we hope to see you there.
There really is no substitute for attending an in-person TDLA event. Even for introverts like me, attending in-person TDLA meetings is a wonderful opportunity to interact with fellow attorneys, engage with our outstanding sponsors, and create new memories.
-Michael Haynie
BOARD OF DIRECTORS
President Michael Haynie Manier & Herod mhaynie@manierherod.com
DRI STATE REPRESENTATIVE
The Gold Standard
TAs your DRI State Representative, in May 2024, I had the opportunity, along with our Executive Director Mary Gadd, President Michael Haynie, and President Elect Hank Spragins, to travel to Washington, D.C. for the DRI Southern/Southeast Regional Meeting. Our own Cate Dugan is nearing the end of her term as DRI Regional Director for the Southern Region, and she and the DRI team put together a great meeting where we enjoyed networking and sharing ideas with our colleagues from the DRI Southern Region (Mississippi, Kentucky, Tennessee) and the Southeast Region (Alabama, Georgia, Florida).
DRI continues to be the gold standard in quality CLE programming for the defense bar, with seminars planned in various locations and practice areas through the rest of 2024, and plans in the works for 2025 programs as well. I invite you to join me and TDLA leadership at the 2024 DRI Annual Meeting at the Hyatt Regency in Seattle Washington on October 16-18, 2024. We are looking forward to hearing from keynote speakers two-time NBA champion and former U.S. Senator, Bill Bradley, and popular public television host, bestselling author, and activist, Rick Steves. Register online through September 9 to save up to $700: https://www.dri.org/annual-meeting/2024
If you are not a member of DRI, be sure to take advantage of DRI’s free DRI Membership program for eligible TDLA members. TDLA is participating in this program to give a free one year DRI membership to first time DRI members or former (lapsed) DRI members whose membership lapsed prior to June 1, 2019. The program runs until the end of September 2024. Eligible TDLA members follow this link to register: https://www.dri.org/membership/ sldo-pilot. If you join using the free membership program, please include my name in the application so DRI will know that your Tennessee State Rep referred you!
TDLA is proud to be a part of DRI, and we hope our members will take advantage of the opportunities to get involved in both TDLA and DRI. If you have any questions about DRI and how to make the most of your membership, please feel free to send me an email: h.lowe@farmersinsurance.com.
Best,
Hannah Lowe
HANNAH LOWE has practiced insurance defense litigation since 2011 and currently works for Farmers Insurance Exchange Claims Litigation Department, Tennessee Branch Legal Office. Hannah is originally from England, but has lived in the United States since 2003. She graduated from the University of Tennessee College of Law in 2010. She may be reached at h.lowe@farmersinsurance.com
President Elect Hal S. “Hank” Spragins Hickman, Goza & Spragins hspragins@hickmanlaw.com
Secretary/ .......... Chris Frulla
Treasurer Rainey, Kizer, Reviere & Bell, PC cfrulla@raineykizer.com
Immediate Past
President Hannah Lowe
Farmers Insurance h.lowe@farmersinsurance.com
DRI State
Representative Hannah Lowe Farmers Insurance h.lowe@farmersinsurance.com
Vice-Presidents Sean W. Martin Carr Allison swmartin@carrallison.com
Rachel Bishop Community Health Systems rachel_bishop@chs.net
Adrienne Fazio Manier & Herod afazio@manierherod.com
Directors Kenneth D. Veit Leitner Williams Dooley & Napolitan kenny.veit@leitnerfirm.com
Ken Ward Trammell, Adkins and Ward kward@tawpc.com
Christina Hadaway Hickman, Goza and Spragins chadaway@hickmanlaw.com
PAST PRESIDENTS
Percy McDonald, Jr.* (1966-1967) William E. Herod* (1967-1968) Edward P.A. Smith* (1968-1969) Mac E. Robinson* (1969-1968) James E. Leary* (1970-1971) William H. Woods* (1971-1972) Woodrow Norvell* (1972-1973) Hugh C. Gracey (1973-1974) Henry T. V. Miller (1974-1975) Paul R. Leitner* (1975-1976) J. G. Lackey, Jr.* (1976-1977) R. Hunter Cagle* (1977-1978) E. Blake Moore (1978-1979) Richard D. Taylor* (1979-1980) E. Riley Anderson* (1980-1981) C. Arnold Cameron* (1981-1982) James H. Camp* (1982-1983) James E. Moffitt (1983-1984) W. Ferber Tracy (1984-1985)
James M. Doran, Jr. (1985-1986) George S. Petkoff (1986-1987) W. Ritchie Pigue (1987-1988) L. Anderson Gaylon III* (1988-1989) J. Minor Tait, Jr.* (1989-1990) Terry L. Hill (1990-1991) Joseph C. Wilson, III (1991-1992) Gary K. Smith (1992-1993) Michael J. Philbin* (1993-1994) Thomas A. Williams (1994-1995) Kenneth R. Shuttleworth (1995-1996) Michael E. Evans (1996-1997) Brian H. Trammell* (1997-1998) Dale H. Tuttle (1998-1999) Katherine “Kitty” Boyte (1999-2000) Gary S. Napolitan (2000-2001)
Joseph R. White (2001-2002) Gary R. Wilkinson (2002-2003)
Steve A. Dix (2003-2004)
Rebecca Brake Murray (2004-2005)
David J. Deming (2005-2006)
Raymond S. Leathers (2006-2007)
Robert G. Norred (2007-2008) C. Douglas Dooley (2008-2009)
Stephen P. Miller (2009-2010)
Melanie M. Stewart (2010-2011)
Robert A. Crawford (2011-2012)
John W. Barringer, Jr. (2012-2013)
Bradford D. Box (2013-2014)
James H. Tucker, Jr. (2014-2015)
Catherine C. Dugan (2015-2016)
Barret S. Albritton (2016-2017)
Michael Mansfield (2017-2018)
Lynn V. Lawyer (2018-2019)
Rockforde D. “Rocky” King (2019-2020)
Heather H. Douglas (2020-2021)
Dawn Carson (2021-2022)
Hannah Lowe (2022-2023)
* Deceased
FARR is a Director at Elliott Davis located in their Chattanooga office. Shannon specializes in the areas of forensic accounting, business valuation, and litigation support services. She provides consulting expert and expert witness services in marital dissolution (divorce) and commercial litigation matters. She may be reached at shannon.farr@elliottdavis.com
Valuing a Business: The Market Approach
Is business valuation an art or a science? The short answer is “both.” Business valuation involves the use of established approaches and methods and draws from the fields of mathematics, statistics, accounting and finance. However, the application of these techniques is an art requiring a deep understanding of the qualitative factors that impact value.
In this article, we focus on the market approach. If you’ve had your house appraised or invested in publicly-traded stocks, you’ve encountered the fundamentals of this approach to business valuation.
WHAT IS THE MARKET APPROACH?
The Market Approach is one of three methods used to value a business, the others being the Asset- (or Cost-) Based Approach and the Income Approach. The Market Approach is often applied in valuations for litigated matters. The International Glossary of Business Valuation Terms defines the market approach as “a general way of determining the value indication of a business, business ownership interest, security or intangible asset by using one or more methods that compare the subject of the valuation to similar businesses, business ownership interests, securities or intangible assets that have been sold.” Simply put, the valuation expert estimates business value by looking at the selling price of reasonable substitutions. The market approach is useful as its basis is in actual market data; however, its use in valuing private, closely-held companies can be limited to do the lack of data on comparable companies.
SHANNON
UNDERSTANDING HOW THE MARKET APPROACH WORKS
For the market approach to be utilized, the valuation analyst must identify and establish a relationship between the known values of another business (or business ownership interest) and the valuation subject. Based on analysis of market data, the valuation professional will derive valuation multiples and then adjust those multiples to reflect differences between the selected transactions or companies and the company being valued. Valuation analysts subscribe to databases such as BizComps, CapIQ and DealStats, among others, to gather information on market multiples. Commonly used valuation multiples include price-to-revenue and price-to-earnings. The valuator will select and adjust, if necessary, the most relevant valuation multiple based on factors such as company size, profitability, growth prospects, industry, and capital structure. Ultimately, the analyst will apply
the appropriate multiple to the company’s revenue or earnings measures to arrive at an indication of value.
THREE METHODS WITHIN THE MARKET APPROACH
One of the most commonly used methods is the guideline transactions method, also referred to as the merger and acquisition (M&A) method. The guideline transactions method relies on completed transaction information from various databases that are recent and comparable in terms of business operations, financial performance, risks, purchase price, and deal terms.
Another method is the guideline public company method. While the M&A method relies on the prices of similar companies that were sold, the guideline public company method uses the stock prices of similar publicly-traded companies. The market value of all outstanding stock and debt is summed to derive the total value of the selected
publicly-traded companies’ capital. Due to the significant differences between closely-held and publiclyheld entities, this method may have limited use when valuing very small companies.
When the company being valued has had transactions in its own equity, the prior transaction method may be used. Adjustments for differences such as financial results, operational changes, risk factors, and the size of the block for sale will be made by the valuation analyst. An important requirement for prior transactions to be applicable is that they were conducted at arm’s length, meaning that the transaction took place between independent parties acting in their own self-interests.
STRENGTHS AND WEAKNESSES OF THE MARKET-BASED APPROACH
The Market Approach is straightforward and uses relatively simple calculations based on actual data and not subjective forecasts such as continued on page 10
Perdido Beach Gathering
In June, civil defense attorneys and their families from Tennessee and Alabama convened for a summer meeting at Perdido Beach Resort in Orange Beach, AL. The event was focused on discussing emerging
legal trends, case strategies, and updates within the realm of civil defense. Networking opportunities were a significant aspect, allowing attorneys to exchange insights and build professional connections. The
setting at Perdido Beach Resort provided a relaxed environment conducive to both formal discussions and informal interactions among peers.
future cash flows. Therefore, the market approach often provides a compelling indication of accurate value since it requires fewer subjective assumptions. Some may view this approach as more science, less art.
However, readily finding reliable and comparable data to perform the market-based valuation methods can be difficult. Not only can there be a lack of a sufficient number of comparable companies or transactions but certain details such as business operations may be lacking as well. When sufficient data to apply these methods is available, a deep understanding of the business being valued and the market in which it and the companies underlying the guideline data is necessary to select, apply and adjust the multiples to calculate the indicated value. This is the required art involved in this approach.
Valuation experts consider the three primary approaches to valuation and determine the most appropriate approaches and methods based on facts and circumstances of the equity interest and company being valued. At times, the methods under the market
approach may be useful as a tool to corroborate a value reached through another approach while not used to directly value the subject company.
SUMMARY
A market-approach based valuation can be a convincing way to derive the fair market value of a subject company. However, each method within the market approach has its own benefits and limitations, and thus a qualified valuation expert is needed to ensure that the methods are applied in an appropriate manner given the unique facts and circumstances regarding the subject company. When valuation issues arise in the context of litigation, it’s imperative to bring in an expert who understands both the science and art of business valuation.
Tennessee Defense Lawyers Association
TDLA Membership Application
I am a defense attorney and first time member of TDLA and I am a member of DRI.*
In-House Counsel (as defin ed below,** please check if applicable) Young Lawyer (admitte d to the bar for ten years or less)
I am not a member of DRI, but I am interested in a DRI membership.
Male Fe mal e N am e
Tit le Firm
Addr es s
Cit y St at e/Prov i nce
Z ip/Pos t Code Cou nt ry
Te le p h o n e Fa x
Pr i mar y area(s) of p r ac ti c e
A s u bs cr ip ti o n to the TDLA Newsletter is i n c lu d ed in the an n u al d u es .
Pl e ase note: In d i vidual Membership is not transferable.
First time a dmi tted to the Ba r in in
s tate/p rovi nce m on t h / day / y e ar
b a r nu mbe r
Number of years licensed to practice in Tennessee.
< 5 years
5 – 15 years
Over 15 years
I n o rder to maximize the educational and networking opportunities for its members, TDLA has established sections which focus more narrowly on specific practice areas. The list of these appears below. TDLA believes that belonging to one or more sections greatly enhances the value of your membership in TDLA and we encourage you to join those that interest you. Membership in a section is free of charge, requires no additional commitment or responsibility on your part, and you may belong to as many sections as you wish. Please indicate which sections you wish to join by marking the corresponding box(es) below.
Nu mber
O p t i o n a l
& Workers Compensation Section
Negligence &
Torts Section Young Lawyers Section of a ttorne ys in your f irm
TDLA is committed to the principle of diversity in its membership and leadership. Accordingly, applicants are invited to indicate which one of the following may best describe them:
Ref err ed by
Name of ref erri ng TDLA M ember atto rn ey (if a ppl i c abl e)
of
i
I devote 51% or more of my professional time to the representation of business, insurance companies or their insureds, associations or governmental entities in civil litigation. I have read the above and hereby make application for individual membership.
DRI = Defens e Researc
SLDO* Members Offer Membership Application
I am a first-time DRI member and I am a member of my SLDO. Note: DRI will contact your SLDO to confirm your membership with them before processing. Categories for individual membership in DRI:
Defense Attorney—$285 USD/year
I n-House Counsel—$285 USD/year (as defined below ***)
G overnment Attorney—$160 USD/year
A subscription to For The Defense is included in the annual dues for ALL price categories. Please note: Individual membership is not transferable. If you have any questions, contact Customer Service at 312.795.1101.
Young Lawyer—$165 USD/year (admitted to the Bar for five years or less). Young Lawyers free registration for one seminar is valid for as long as you are a member of the Young Lawyers Committee.
National Foundation for Judicial Excellence (NFJE) Contribution—$35 USD/year
Fax Email
Primary area(s) of practice
First time admitted to the Bar in in
state/province month/day/year
. bar number
I am a member of a state or local defense organization.
Yes No
Name of organization
I am an armed services veteran.
DRI encourages you to join committees to greatly enhance the value of your membership. Just check the boxes (no limit) on the Join a Committee form, last page.
DRI is committed to the principle of diversity in its membership and leadership. Accordingly, applicants are invited to indicate which of the following may best describe them:
Referred by
Name of referring DRI Member attorney (if applicable)
African American A sian American Hispanic N ative American Caucasian Multi-Racial LGBT Other
Date of birth MM/DD/YY
AMOUNT DUE
I devote a substantial portion of my professional time to the representation of business, insurance companies or their insureds, associations or governmental entities in civil litigation. I have read the above and hereby make application for individual membership.
I authorize DRI to send me announcements via mail, facsimile and phone about its programs, services and all other offerings that may be of interest to me or my colleagues. I also consent to receipt of notices from DRI in electronic form, including email. I understand I have the right to withdraw my consent at any time.
Signature
Date
All applications must be signed and dated.
*S LDO=State and Local Defense Organization
** N on-transferable and expires 18 months after join date; excludes the Annual Meeting.
* ** In-house counsel is defined as a licensed attorney who is employed exclusively by a corporate or other private sector organization, for the purpose of providing legal representation and counsel only to that corporation, its a ffi liates and subsidiaries.
† S ee reverse side for NFJE description and state disclosure information.
†† S ee reverse side for Auto Pay Terms and Conditions.
Please remit payment to: DRI 72225 Eagle Way Chicago, IL 60678-7252
| dri.org
PAYMENT METHOD
My c heck for $ (USD) is enclosed.
Pl ease bill me. (Your membership will be inactive until DRI receives payment.)
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Hannah Lowe
TENNESSEE CHAPTER
Kreis White
Richard Marcus
David W. Noblit
Ronald D. Wells
Mark C. Travis
John T. Blankenship
Jeffrey Ward
Robert L. Arrington
Paul D. Hogan Jr.
Dana C. Holloway
James H. London
Sarah Y. Sheppeard
C. Scott Taylor
William D. Vines III
Howard H. Vogel
Allen S. Blair
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