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Willamette Management Associates analysts routinely perform forensic analyses related to disputes over intellectual property royalty rates, intercompany transfer prices, economic rents, owner/employee reasonable compensation, breach of contract lost profits, and tort-related economic damages. These forensic analysis and expert testimony engagements often relate to the following:

Intellectual property analysis
  • License fair royalty rate analysis
  • Infringement damages analysis
  • Damages analysis related to breach of use, development, commercialization, nondisclosure, or other contract
Commercial litigation damages analysis
  • Breach of contract lost profits
  • Lost (interference with) business opportunity analysis
  • Forensic accounting and fraud investigation
  • Acquisition fraud and misrepresentation
Other economic damages claims analysis
  • Shareholder oppression or dissipation of corporate assets claims
  • Tortious interference with business opportunity claims
  • Antitrust/anticompetitive actions
  • Eminent domain and condemnation “takings”
Event analysis
  • Failure to disclose a reportable event
  • Solvency/insolvency analysis
  • Lender liability damages analysis
  • Breach of fiduciary duties damages
Reasonableness of executive compensation analysis
  • Income tax disputes regarding either excess or inadequate employee compensation
  • Shareholder oppression claims
  • ESOP-owned company executive compensation
  • Not-for-profit entity executive compensation

Intellectual Property Analysis
We conclude the fair value, license royalty rate, ALP intercompany transfer price, economic damages, or remaining useful life of patents, copyrights, trademarks, and trade secrets. We analyze intellectual property for transaction, taxation, financing, and litigation purposes.

Sample Engagements +

For a Fortune 500 consumer products manufacturing company, we calculated both lost profits and a fair royalty rate related to a patent infringement claim. The unique aspect of this engagement was that the infringed product was only one of over 140 patented components of the consumer product.

Commercial Litigation Damages Analysis
We perform forensic analyses related to infringement, breach of contract, breach of noncompetition or nondisclosure agreements, trade secret infringement, breach of joint venture, interference with business opportunity, antitrust, lender liability, fraud and misrepresentation, acquisition earn-out dispute, accounting fraud and misrepresentation, and other reasons. We calculate lost profits, cost to restore, or other economic damages measurements. Our forensic analysts support their damages opinions with expert testimony.

Sample Engagements +

Our client was the plaintiff in a breach of contract litigation. The client designed and manufactured specialized food preparation equipment for the food service industry. The client had contracts to provide specially designed toaster ovens for several national fast food chains. The manufacturer of the heating elements, the defendant, provided defective products. The components of our economic damages analysis included: lost historical and prospective profits, lost market share, and damage to corporate reputation and goodwill. We quantified the plaintiff's economic damages, and we provided expert testimony to support the claimed economic damages.

We were retained by counsel for the defendant, a national company that sells doughnuts and related food items through both company-owned and franchised stores, in a breach of contract dispute. The plaintiffs claimed economic damages related to their ownership interest in a group of franchised stores that were being closed by the company. We provided expert testimony at the American Arbitration Association (AAA) hearing. The AAA arbitrators found our economic damages estimate to be more credible than the economic damages estimate offered by the plaintiffs' expert witness.

Our client was a partnership that owned a hotel near the Minneapolis airport. The general partner constructed and contributed the hotel to the partnership. A limited partner contributed the adjoining undeveloped property. That property was improved and then used as the principal guest parking lot for the hotel. The limited partner withdrew from the partnership, causing the distribution of the parking property from the partnership to the partner. The partnership sued the limited partner for breach of contract and other claims. We quantified the economic damages to the hotel business enterprise related to the loss of an adequate parking facility.

A major Japanese financial institution, our client, sold its domestic commercial leasing company subsidiary to a New York City-based financial services company. About a year after the acquisition, the buyer, the plaintiff in the litigation, claimed fraud and financial statement misrepresentation with regard to the target company. The principal issue in the dispute was: what was the effect on the target company acquisition value due to the alleged fraud and misrepresentation? We quantified what the most likely acquisition price would have been if all of the alleged misrepresentations were known to the buyer. And, we provided expert testimony in support of our damages analysis.

Other Economic Damages Claims Analysis
We consider all generally accepted economic damages methods and procedures related to any shareholder oppression, dissenting shareholder appraisal rights, dissipation of corporate assets, officers and directors breach of fiduciary duties, eminent domain and condemnation, and other economic damages claims. Our forensic analysts provide expert witness testimony to support our economic damages analyses.

Sample Engagements +

Dissenting Shareholder Rights Testifying Expert Services
In the case, In Re Appraisal of The Orchard Enterprises, Inc. (No. 5713-CS, 2012 WL 2923305 (Del. Ch. 2012), aff'd No. 470, 2013 WL 1282001 (Del. 2013)), Willamette Management Associates was retained on behalf of the petitioners in a case where the subject of the dispute was the fair value of the Orchard Enterprises, Inc. ("Orchard") common stock at the time the company was taken private. Orchard was a digital media services company specializing in music from independent labels with a mission to acquire distribution rights, build sales channels, and monetize these rights in new and innovative ways. The petitioners had received $2.05 per share in the going-private transaction. At trial, Tim Meinhart, a managing director of our firm, testified that the fair value of the Orchard common stock at the time of the go-private transaction was $5.42 per share. The court agreed with our overall conclusion that the transaction occurred at a price that was lower than the fair value of the stock. The court concluded that the common stock fair value was $4.67 per share at the time of the go-private transaction.

A publicly traded health care corporation owned a controlling interest in a high technology medical products company. After the medical products company commercialized a few successful products, the controlling stockholder squeezed out the noncontrolling company founders. The minority stockholders exercised their dissenting shareholder appraisal rights and sued in state court for the fair value of their equity interest. We estimated the fair value of the dissenters' shares, and we testified in state court in support of the minority stockholders fair value claim.

Our client owned a water distribution company in suburban Maryland. The local municipality exercised its legal right of eminent domain. The investor-owned utility (IOU) and the condemning municipality could not agree on a negotiated fair market value price of the business assets subject to the taking. The matter was decided by a jury trial. We testified that the municipality's appraiser did not consider the value of the water system's intangible assets, including computer software, books and records, customer relationships, system maps and engineering drawings, and licenses and permits. The jury agreed with our expert testimony, and the jury awarded to the IOU the value of the water system intangible assets.

Jamaica Water Supply Company was the last privately owned water distribution company in New York City. The New York City government decided to exercise its legal right of eminent domain to condemn the IOU water system assets. The city's expert valued the water system real estate and tangible property but ignored all of the water system intangible assets. We valued the water system customer relationships, water testing and other required documentation, computer software, water diversion rights, engineering drawings and system maps, licenses and permits, and assembled workforce. We testified in state court, and the court awarded to our client the value of water system intangible assets.

Prior to the Islamic Revolution, Foremost McKesson owned the largest commercial dairy company in Iran. Along with all other American-owned companies, the Pak Dairy Company was nationalized by the Iranian government in 1979. We estimated the fair market value of the Pak Dairy business enterprise that was subject to international expropriation. On behalf of the plaintiff, Foremost McKesson, we testified in U.S. District Court in support of our valuation analysis and our fair market value conclusion.

Event Analysis
Event analyses are common in claims related to fraud against the market, fraud and misrepresentation, lender liability, and solvency and insolvency. In such claims, we may use event analysis to prove that the wrongful action either did or did not damage the claimant party. And, we may use event analysis to quantify the amount of economic damages, if any, suffered by the claimant party.

Sample Engagements +

We quantified the damages to a municipal employees retirement fund when the institutional fund manager (the trust department of a major bank) committed fraud and misrepresentation regarding the fund investments. The event subject to analysis was the misrepresentation as to the quality and value of the mortgage-backed securities (MBS) and the risk of investing in a MBS portfolio.

Reasonableness of Executive Compensation Analysis
Controversies regarding the reasonableness of shareholder/executive compensation arise regarding controversies related to taxation (both C corporation and S corporation), shareholder abuse, ESOP sponsor company value, and not-for-profit entity private inurement. We use all generally accepted reasonableness of executive compensation analyses (including the independent investor test) to conclude a range of reasonable shareholder/executive compensation.

Sample Engagements +

We analyzed the reasonableness of executive compensation of the top managers of a substantial close corporation, the defendant in a litigation. The plaintiffs, our clients, were certain company shareholders in this shareholder oppression litigation. The plaintiffs claimed dissipation of corporate assets and breach of fiduciary duties related to the levels of executive compensation. We testified in state court about our analysis which proved the defendant executives were earning more than a reasonable level of executive compensation..

We performed numerous reasonableness of compensation analyses for a not-for-profit health care research institution in response to private inurement, excess benefit, and intermediate sanctions claims by the Internal Revenue Service. Our various compensation analysis methods included industry salary survey analyses, analyses of compensation data from public filings, financial ratio analyses, and independent investor test analyses.