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Dr. William Simon*, a successful ophthalmologist and surgeon, encouraged his sons to follow his footsteps. Older son, Bradley, joined his father after his residency. Randy, the younger son, followed a few years later. William gifted equally a few shares to each of his sons.
William retired and redeemed all his shares except for shares equivalent to a 2% ownership of the corporation. Bradley, a skilled surgeon, and Randy, who was great with patients, seldom saw eye to eye, yet practiced together for their father. Bradley and Randy, being 49% stockholders, had the same salary and prerequisites. Bradley controlled all business aspects and Randy acquiesced to Bradley’s dominance out of respect for his father.
After many years, Bradley’s son, Craig, joined the medical practice as a non-stockholder physician employee. Bradley’s wife, Cindy, became the office manager. Craig’s patient lists grew substantially over the years because Cindy favored her son in the assignment of new patients.
Upon his death, William, who was concerned about the years of disagreements between his two sons, left his two percent ownership to Randy. Randy then owned 51% and Bradley owned 49% of the corporate stock.
Shortly, thereafter, it became unbearable between the brothers and liquidation was necessary. Since Cindy, managed the office and its employees, Randy made plans to move his practice. He then sought to recover his 51% stock ownership of the corporate assets, both tangible and intangible, from Bradley. Bradley refused to provide any monetary consideration citing what he believed to be years of excessive compensation paid to his brother. Randy filed a lawsuit against his brother seeking his 51% share of the corporate assets.
To help him prepare the case, Randy’s attorney, retained Dennis M. Taylor, Taylor Rees Beckey, as an expert witness in business valuation.
Mr. Taylor cited the manner in which the practice was operated and determined a value for both the tangible and intangible assets including a value of the practice goodwill of the corporation and the professional goodwill of the physicians. At trial, he testified that Randy should be entitled to 51% of the corporate tangible assets net of liabilities and the value of the corporation’s practice goodwill. Detailed calculations were also provided.
Assisted thorough analysis and forensic accounting skills of Taylor Rees Beckey, the judge ruled that Randy was entitled to a judgment amount equivalent to Mr. Taylor’s expert witness report.
* For confidentiality, case names have been changed.
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