Wayne L. Ryan Revocable Trust v. Ryan , 308 Neb. 851 ( 2021 )

Nebraska Supreme Court Online Library
www.nebraska.gov/apps-courts-epub/
04/23/2021 08:09 AM CDT
- 851 -
Nebraska Supreme Court Advance Sheets
308 Nebraska Reports
WAYNE L. RYAN REVOCABLE TRUST v. RYAN
Cite as 308 Neb. 851Wayne L. Ryan Revocable Trust et al., appellees,
v. Constance “Connie” Ryan, appellee,
and Streck, Inc., appellant.
___ N.W.2d ___
Filed April 9, 2021. No. S-19-951.
1. Equity: Stock: Valuation. A proceeding to determine the fair value of a
petitioning shareholder’s shares of stock is equitable in nature.
2. Equity: Appeal and Error. An appellate court reviews an equitable
action de novo on the record and reaches a conclusion independent of
the factual findings of the trial court; however, where credible evidence
is in conflict on a material issue of fact, the appellate court considers
and may give weight to the circumstance that the trial court heard and
observed the witnesses and accepted one version of the facts rather
than another.
3. Statutes: Appeal and Error. Statutory interpretation is a matter of law,
in connection with which an appellate court has an obligation to reach
an independent, correct conclusion irrespective of the determination
made by the court below.
4. Prejudgment Interest: Appeal and Error. Awards of prejudgment
interest are reviewed de novo.
5. Judgments: Evidence. A trial court in a case tried to the court without
a jury may adopt a party’s proposed findings of fact verbatim provided
that the findings and conclusions reflect the court’s independent view
and judgment of the evidence.
6. Judgments: Evidence: Appeal and Error. Although findings drawn by
the trial court itself are more helpful to the appellate court, findings pre-
pared by counsel and adopted verbatim by the trial judge are formally
the judge’s and will stand if supported by evidence.
7. Judgments: Appeal and Error. The adoption of a party’s proposed
findings does not require an appellate court to set aside the deference
ordinarily given to the trial judge’s factual findings.
- 852 -
Nebraska Supreme Court Advance Sheets
308 Nebraska Reports
WAYNE L. RYAN REVOCABLE TRUST v. RYAN
Cite as 308 Neb. 8518. Judgments: Evidence: Appeal and Error. When accepting a party’s
proposed findings, minor mistakes that do not prejudice a party consti-
tute harmless error; however, a trial court may commit error if the pro-
posed facts or law are unsupported by the evidence and cause prejudice.
The critical inquiry is whether such findings, as adopted by the court,
are clearly erroneous.
9. Corporations: Stock: Valuation. A determination of fair value of
corporate shares in an election-to-purchase proceeding following a
shareholder’s petition for dissolution of corporation is to be based on all
material factors and elements that affect value, given to each the weight
indicated by the circumstances.
10. ____: ____: ____. The real objective in determining the fair value
of corporate shares is to ascertain the actual worth of that which the
shareholder loses. Under this analysis, the court may consider the nature
of the business and its operations, its assets and liabilities, its earning
capacity, the investment value of its stock, the market value of the stock,
the price of stocks of like character, the size of the surplus, the amount
and regularity of dividends, future prospects of the industry and of the
company, and good will, if any.
11. Expert Witnesses. The determination of the weight that should be given
expert testimony is uniquely the province of the fact finder.
12. Corporations: Stock: Valuation. The trial court is not required to
accept any one method of stock valuation as more accurate than another
accounting procedure.
13. Corporations: Valuation. A trial court’s valuation of a closely held
corporation is reasonable if it has an acceptable basis in fact and
principle.
14. Corporations: Stock: Valuation: Expert Witnesses. A judicial valua­
tion of corporate stock presents unique challenges which are compli-
cated by the clash of contrary, and often antagonistic, expert opinions of
value, prompting the trial court to wade through widely divergent views
reflecting partisan positions in arriving at its determination of a single
number for fair value.
15. Corporations: Stock: Valuation: Evidence. While discharging its stat-
utory mandate to value a shareholder’s stock, it is entirely proper for a
trial court to adopt one expert’s model, methodology, and calculations
if they are supported by credible evidence and the judge analyzes them
critically on the record.
16. Corporations: Stock: Valuation: Appeal and Error. As long as they
are supported by the record, an appellate court may defer to the trial
court’s factual findings in a statutory corporate stock valuation pro-
ceeding, even if the appellate court might independently reach a differ-
ent conclusion.
- 853 -
Nebraska Supreme Court Advance Sheets
308 Nebraska Reports
WAYNE L. RYAN REVOCABLE TRUST v. RYAN
Cite as 308 Neb. 85117. Corporations: Stock: Valuation. The valuation of corporate shares is
to be made without consideration of any increase in value resulting from
the transaction itself.
18. Statutes: Appeal and Error. Statutory language is to be given its plain
and ordinary meaning, and an appellate court will not resort to inter-
pretation to ascertain the meaning of statutory words which are plain,
direct, and unambiguous.
Appeal from the District Court for Sarpy County: Nathan
B. Cox, Judge. Affirmed.
Thomas H. Dahlk and Victoria H. Buter, of Kutak Rock,
L.L.P., and Ronald E. Reagan, of Reagan, Melton & Delaney,
L.L.P., for appellant.
Kamron T.M. Hasan, David A. Lopez, and Marnie A. Jensen,
of Husch Blackwell, L.L.P., for appellees Wayne L. Ryan
Revocable Trust et al.
Daniel J. Welch and Damien J. Wright, of Welch Law Firm,
P.C., for appellee Constance “Connie” Ryan.
Heavican, C.J., Cassel, Funke, Papik, and Freudenberg,
JJ.
Funke, J.
The sales process implemented by a corporation’s succes-
sor president and chief executive officer (CEO) failed to pro-
duce an offer acceptable to the majority shareholder. When
the corporation was not sold, the majority shareholder sued
the president and CEO, as well as the corporation, alleg-
ing shareholder oppression and breach of fiduciary duty. The
corporation elected to purchase the petitioning shareholder’s
shares, which initiated a valuation proceeding in district court.
The court held a 9-day bench trial and determined the fair
value of the shares to be purchased by the corporation to be
$467 million. The court awarded the petitioning shareholder
approximately $256 million in prejudgment interest and, over
- 854 -
Nebraska Supreme Court Advance Sheets
308 Nebraska Reports
WAYNE L. RYAN REVOCABLE TRUST v. RYAN
Cite as 308 Neb. 851objection, ordered the corporation to pay the fair value portion
of the judgment within 10 days.
The corporation, Streck, Inc., appeals the court’s valuation
of shares, award of prejudgment interest, and order to make
payment. Based on the record and credibility findings of the
district court, and the statutory law governing prejudgment
interest in a proceeding to value a petitioning shareholder’s
shares, we conclude that Streck’s appeal is without merit.
Therefore, we affirm.
I. BACKGROUND
1. Parties
(a) Streck
Streck, a closely held, private family business, is a Nebraska
corporation with its principal place of business in La Vista,
Sarpy County, Nebraska. Streck is a subchapter S corporation
under the Internal Revenue Code.
Streck is a worldwide industry leader in developing and
manufacturing cell stabilization technology for use in hematol-
ogy, immunology, and molecular diagnostics. Streck’s products
are used to control and calibrate laboratory instruments that
analyze blood cells and DNA, and they have a significant
impact in health care. When Dr. Wayne L. Ryan founded Streck
in 1971, Streck’s core business was hematology controls.
Streck was “‘first to market’” with a majority of its products,
and it maintains approximately three-quarters of the hematol-
ogy control market in the United States. Dr. Ryan subsequently
developed a blood collection tube (BCT) product, which allows
for the preservation and transportation of blood samples. The
BCT products’ capability to stabilize “DNA and . . . RNA” was
a significant advancement in the field of molecular diagnostics.
In addition, Streck’s flow cytometer identifies white blood
cells, which allows for the diagnosis of diseases, such as AIDS
and various cancers.
Streck, with its 330 employees and 200,000 square foot
facility, has a fully integrated business model for its products,
- 855 -
Nebraska Supreme Court Advance Sheets
308 Nebraska Reports
WAYNE L. RYAN REVOCABLE TRUST v. RYAN
Cite as 308 Neb. 851with research and development, manufacturing, and distribu-
tion. Streck has a strong operational performance, increasing
sales every year since inception with no product recalls in
the past 25 years. Streck has deeply entrenched relationships
with its largest customers that are secured with long-term con-
tracts. Streck has a valuable portfolio of intellectual property,
with, as of December 2014, 42 patents and 42 pending patent
applications. Streck has an intellectual property strategy, with
both offensive and defensive strategies, designed to protect its
position in the market. For its BCT products, Streck planned
to apply for broad patent protections for extended periods
of time.
Streck’s financial performance surged in recent years. From
2010 to 2014, Streck’s annual net sales went from $73.9 mil-
lion to $101.8 million, averaging 8 percent growth each year.
During this time period, Streck’s average gross profit margins
were 62.6 percent, 64.4 percent, 66.7 percent, 68.6 percent, and
69.7 percent. Streck’s adjusted earnings before interest, taxes,
depreciation, and amortization (EBITDA) during this period
was $33.7 million, $36.1 million, $40.1 million, $49.6 million,
and $53.6 million. In April 2014, Streck had 10 new products
in development. In July 2014, Streck set a goal to double sales
within the next 6 years and set a goal for 2015 to develop and
execute a growth strategy to achieve $200 million in sales by
2020. Streck expected continued growth with its BCT products
and planned to gain one of the largest companies in Streck’s
industry as a new client.
(b) Ryan Family
Dr. Ryan was Streck’s founder, director of research and
development, CEO, and chairman of the board. Dr. Ryan and
his wife, Eileen Ryan, had five children: Constance Ryan
(Connie), Tim Ryan, Stacy Ryan, Carol Ryan, and Steven Ryan.
The ownership structure of Streck is comprised of the Wayne
L. Ryan Revocable Trust (the RRT), which owns 52.275 per-
cent; Eileen’s trust, which owns 39.641 percent; and Connie’s
trust and the 2014 “Grantor Retained Annuity Trust,” which
- 856 -
Nebraska Supreme Court Advance Sheets
308 Nebraska Reports
WAYNE L. RYAN REVOCABLE TRUST v. RYAN
Cite as 308 Neb. 851owns 8.008 percent. In 2014, Dr. Ryan gifted .026 percent of
Streck’s voting stock to Carol, Steven, and Barry Uphoff, a
family friend. Uphoff worked in Streck’s laboratory after col-
lege and later served on Streck’s board of directors for nearly a
decade, including a brief period as chairman of the board.
In March 2013, Eileen passed away. Eileen’s estate con-
veyed her one-third of Streck’s voting shares to Connie, giving
Connie two-thirds of the company’s voting shares. As a result,
Connie obtained voting control of Streck, with the power to
appoint a majority of Streck’s board of directors. In September
2013, based on her own recommendation to the board, Connie
replaced her father, Dr. Ryan, as CEO. Connie proposed that
Streck name a new director of research and development and
encouraged Dr. Ryan to retire. Dr. Ryan did not object to
Connie’s becoming CEO so long as the company was sold.
Connie agreed to prepare the company for sale in the next 2
to 3 years.
In the spring of 2014, Dr. Ryan made Carol the trustee of
the RRT.
2. Project Blizzard
Connie’s effort to sell Streck was referred to within Streck
as “Project Blizzard.” In January 2014, prior to the launch of
Project Blizzard, Streck received interest from potential buy-
ers. A private investor told Connie he would buy Streck for
$330 million. Mike Morgan, Streck’s former chief financial
officer (CEO), valued Streck at $285 million for purposes of
making an offer to purchase 10 percent of Streck. Uphoff,
who is also the founder and managing partner of a private
equity firm, Capricorn Healthcare & Special Opportunities
(Capricorn), submitted an indication that he would purchase
Streck for $425 million.
During this time, Dr. Ryan engaged Carson Wealth Man­
agement Group (Carson) to conduct a valuation. Carson found
Streck to be a “very high quality business with incredible mar-
gins and solid growth prospects.” Two analysts from Carson
independently valued Streck at approximately $705 million.
- 857 -
Nebraska Supreme Court Advance Sheets
308 Nebraska Reports
WAYNE L. RYAN REVOCABLE TRUST v. RYAN
Cite as 308 Neb. 851According to the testimony of Carol, based on the inter-
est from prospective buyers in the early part of 2014, Connie
and Streck’s chairman of the board, Ron Gartlan, believed
they could conduct a sales process themselves and bring in
an investment banker at the end of the sales process. Connie
and Gartlan determined that the sale of Streck would be run
through Streck’s management, without input from Dr. Ryan
and Carol. Dr. Ryan and Carol voiced that Streck was going
blind into the sale as to its true value, and they expressed
concern about the lack of the involvement of an investment
banker. Gartlan indicated that he was familiar with an invest-
ment banker that Streck could use, and in March 2014, Streck
engaged the investment banker without interviewing other
candidates. Thereafter, Dr. Ryan and Carol were excluded from
the meetings which Streck and its investment banker had with
potential buyers.
Project Blizzard consisted of three rounds of bidding. In
the first two rounds, each prospective buyer submitted a
preliminary indication of interest (IOI). In the third round,
each buyer submitted a final letter of intent (LOI). The bids
excluded the approximately $76.5 million of cash held by
Streck, which would be distributed to the shareholders prior to
closing. All of the bids submitted through the process agreed
to Streck’s primary terms, which were to keep the business in
Omaha, Nebraska; maintain relationships with key customers;
and retain key employees, including Connie and her manage-
ment team.
Ten potential buyers, consisting of one diagnostics health
care company and nine private equity companies, submitted
an IOI in the first round. Most bids contained a range with
a low number and high number. The bids were as follows:
Bio-Techne, Inc., $387 million to $427 million; Water Street,
$415 million to $430 million; Summit Partners, $425 mil-
lion; Capricorn, $425 million to $450 million; Bain Capital
Partners, LLC, $475 million to $525 million; The Carlyle
Group, $550 million to $600 million; The Jordan Company,
- 858 -
Nebraska Supreme Court Advance Sheets
308 Nebraska Reports
WAYNE L. RYAN REVOCABLE TRUST v. RYAN
Cite as 308 Neb. 851$550 million to $600 million; Genstar Capital Management
LLC, $570 million; GTCR, $575 million to $625 million; and
Warburg Pincus LLC, $525 million to $625 million. GTCR, a
private equity firm based in Chicago, Illinois, launched a new
fund in 2014 and was searching for a platform company in
molecular diagnostics. GTCR submitted a bid with a midpoint
of $600 million, which was the highest in the first round.
Connie, with support from the board and Streck’s invest-
ment banker, selected 6 of the 10 potential buyers to visit
Streck to meet with management, tour the facilities, and obtain
further due diligence from Streck. The four lowest bids from
round one advanced to round two. GTCR, the highest bidder,
did not advance to round two. Each potential buyer selected
for round two submitted a revised IOI. The round two bids
were as follows: Summit Partners, $350 million to $375 mil-
lion; ­Bio-Techne, $432 million to $447 million; Capricorn,
$490 million to $515 million; Water Street, $505 million to
$530 million; The Carlyle Group, $565 million to $585 mil-
lion; and Warburg Pincus, $575 million. Also around this time
period, in June 2014, Streck’s investment banker valued Streck
at $558.5 million, exclusive of cash.
At a board meeting held July 11, 2014, Dr. Ryan announced
that he had lost confidence in the sales process. Dr. Ryan,
a 52.275 percent shareholder and the income beneficiary of
Eileen’s trust, stated that he had requested to include Carol
and the trustee of Eileen’s trust in the process and that it
was unfair to exclude them. Before leaving the meeting,
Dr. Ryan stated:
I own now 92% of the stock. Connie owns eight. And
the Board has zero. You have nothing to lose. I have
everything to lose in this decision you’re making. . . . The
decisions about the bidding process and the bidders are
being made without input from approximately 92% of the
total votes.
Streck went through the offers, submitted followup ques-
tions, and selected the companies which made the four
- 859 -
Nebraska Supreme Court Advance Sheets
308 Nebraska Reports
WAYNE L. RYAN REVOCABLE TRUST v. RYAN
Cite as 308 Neb. 851highest bids as finalists and requested that each submit an
LOI. Streck’s investment banker maintained a dialogue with
the potential buyers and facilitated further due diligence.
Streck’s management conducted a second round of meetings
with the buyers. Following this process, Capricorn elected not
to submit an LOI.
Streck received three LOI’s in the third and final round.
Warburg Pincus offered $450 million, plus a $50 million 3-year
earnout. Water Street offered $530 million. The Carlyle Group
offered $590 million. On August 19, 2014, the board held a
meeting to select an LOI to recommend to the shareholders.
Dr. Ryan announced that he did not find any of the LOI’s
to be acceptable. Dr. Ryan stated that he was in no position
to approve a sale, because he did not see what was gained.
Dr. Ryan expressed that he was not being listened to and that
the process was a waste of time. After Dr. Ryan exited the
meeting, the board adopted a resolution to discontinue the sales
process for at least 2 years before exploring another potential
sale. Connie stated that she was no longer interested in selling
the company and that due to her majority voting rights, there
would be no sale without her agreement.
Following the August 2014 board of directors’ meeting,
Uphoff submitted an IOI to Dr. Ryan that valued Streck at
$420 million. In September 2014, Carol, as trustee for the RRT,
and with approval from the trustee of Eileen’s trust, contacted
GTCR. GTCR submitted an IOI of $625 million to $675 mil-
lion. Connie refused Carol’s request to schedule a sharehold-
ers’ meeting to consider GTCR’s proposal. Connie stated that
she had “informed the Board that I do not wish to pursue a
sale” and that Streck had terminated its engagement with its
investment banker. Carol convened a shareholders’ meeting to
discuss GTCR’s offer, which Connie did not attend.
3. Pretrial
In October 2014, the RRT filed suit against Connie and
Streck in the district court for Sarpy County, alleging share-
holder oppression under Neb. Rev. Stat. § 21-20,162 (Reissue
- 860 -
Nebraska Supreme Court Advance Sheets
308 Nebraska Reports
WAYNE L. RYAN REVOCABLE TRUST v. RYAN
Cite as 308 Neb. 8512012) and breach of fiduciary duty. The petition requested,
among other things, judicial dissolution of Streck.
Streck formed a “Special Litigation Committee” (SLC) to
determine how to respond to the lawsuit. Streck engaged a
financial advisor, Empire Valuation Consultants, LLC (Empire),
to conduct an independent valuation of Streck. Empire valued
the RRT’s shares at a range of approximately $271 million
to $328 million. After investigating the matter and consider-
ing various alternatives, the SLC found that a sale of Streck
“continues to be an attractive alternative” if the shareholders
committed to a sale at a reasonable price. However, the SLC
was not confident that the shareholders would agree to a sale
despite the advantages. Therefore, the SLC recommended that
Streck purchase the RRT’s stock. In making this recommenda-
tion, the SLC recognized the litigation risk to Streck, includ-
ing the potential for an extended legal process and a high
stock value established by the court. But the SLC concluded
that these “obligations and risks are outweighed by the ben-
efits realized.”
On January 19, 2015, Streck filed an “Election to Purchase”
the RRT’s shares pursuant to Neb. Rev. Stat. § 21-20,166
(Reissue 2012). Prior to the repeal of § 21-20,166, made effec-
tive January 1, 2017, by 2015 Neb. Laws, L.B. 157, § 10,
it allowed a corporation in a judicial dissolution action to,
rather than dissolve, elect to purchase the shares owned by
the petitioning shareholder. Since the time that Streck filed the
election to purchase, and prior to this appeal, the Legislature
repealed § 21-20,166 due to the adoption of the Nebraska
Model Business Corporation Act (NMBCA), Neb. Rev. Stat.
§§ 21-201 through 21-2,232 (Cum. Supp. 2016). However,
§ 21-2,232 of the NMBCA contains a saving provision that
provides that the repeal of any statute by the NMBCA “does
not affect” any “dissolution commenced under the statute
before its repeal, and the . . . dissolution may be completed
in accordance with the statute as if it had not been repealed.”
Furthermore, based on the timing of events in this matter,
- 861 -
Nebraska Supreme Court Advance Sheets
308 Nebraska Reports
WAYNE L. RYAN REVOCABLE TRUST v. RYAN
Cite as 308 Neb. 851the provisions of § 21-20,166 are applicable. 1 In any event,
the election provisions under the now-repealed § 21-20,166 are
substantially similar to those found in the NMBCA. Thus, the
repeal of § 21-20,166 is not material in this matter.
Under § 21-20,166(3), parties have 60 days from the filing
of the election to reach an agreement on the fair value and
terms of purchase of the petitioner’s shares. When an agree-
ment is not reached, under § 21-20,166(4), the court, “upon
application of any party, shall stay such proceedings and
determine the fair value of the petitioner’s shares as of the day
before the date on which the petition [for dissolution] was filed
or as of such other date as the court deems appropriate under
the circumstances.”
In February 2015, Streck offered to purchase the RRT’s
shares for approximately $220 million, which included an
$80 million discount for lack of control and lack of market-
ability. On March 23, 2015, Streck filed an application for
stay, alleging that 60 days had elapsed and that the parties
could not agree on the value of the RRT’s shares. Streck asked
the court to determine the fair value of the RRT’s shares as of
October 29, 2014, the day before the filing of the RRT’s peti-
tion. Connie filed a motion also requesting that the court grant
a stay and determine the fair value of the RRT’s shares. Connie
did not file her own election to purchase the RRT’s shares. On
April 28, 2015, the court issued a stay and permitted an addi-
tional 90 days for discovery and negotiations on the issue of
fair value.
On June 29, 2015, the RRT moved for leave to file an
amended complaint. The RRT’s proposed amended complaint
requested that the court declare Streck’s election to purchase
the RRT’s shares invalid. The court held a hearing and denied
the motion to amend.
1
Dragon v. Cheesecake Factory, 300 Neb. 548, 915 N.W.2d 418 (2018)
(statutes covering substantive matters in effect at time of transaction or
event govern, not later enacted statutes).
- 862 -
Nebraska Supreme Court Advance Sheets
308 Nebraska Reports
WAYNE L. RYAN REVOCABLE TRUST v. RYAN
Cite as 308 Neb. 851In January 2016, the RRT moved for partial summary judg-
ment, seeking an order that discounts for lack of control or lack
of marketability are not applicable in the determination of the
“fair value” of the RRT’s shares. Streck filed its own motion
for partial summary judgment, seeking an order that under
§ 21-20,166(2), it validly exercised its election to purchase the
RRT’s shares. On April 25, the court entered an order grant-
ing both motions. With respect to the RRT’s motion, the court
found that, pursuant to our holding in Rigel Corp. v. Cutchall, 2
discounts for lack of control or lack of marketability are not
applicable when determining the “fair value” of a petitioning
shareholder’s corporate stock. With regard to Streck’s motion,
the court held that Streck was entitled to exercise an election
to purchase the RRT’s shares, and had validly done so, and
that therefore, under § 21-20,166, the election was not subject
to challenge.
On May 13, 2016, Stacy, for the second time, sought to
intervene in the case. The court sustained Streck’s motion to
strike Stacy’s complaint in intervention. We affirmed the dis-
trict court’s denial of leave to intervene. 3 The matter returned
to the district court.
4. Bench Trial
Dr. Ryan passed away in 2017. Thereafter, Carol stepped
down as trustee. Steven and a trust company were appointed
to serve as cotrustees of the RRT. The district court held a
bench trial from September 24 through October 4, 2018. The
principal issues before the court were (1) the fair value of the
RRT’s shares of Streck as of October 29, 2014; (2) whether the
RRT was entitled to an interest award under § 21-20,166(5)(a);
and (3) whether to allow Streck to purchase the RRT’s shares
in installments.
2
Rigel Corp. v. Cutchall, 245 Neb. 118, 511 N.W.2d 519 (1994).
3
Wayne L. Ryan Revocable Trust v. Ryan, 297 Neb. 761, 901 N.W.2d 671(2017).
- 863 -
Nebraska Supreme Court Advance Sheets
308 Nebraska Reports
WAYNE L. RYAN REVOCABLE TRUST v. RYAN
Cite as 308 Neb. 851(a) Valuation Experts Robert Reilly
and Jeffrey Risius
At trial, the court heard opposing testimony from two experts
in business valuation. Both experts utilized the discounted
cashflow (DCF) method, a generally accepted method under
the income approach. In combination with the DCF method,
both experts utilized two generally accepted methods under
the market approach, which were the guideline publicly traded
company (GPTC) method and the guideline merger and acqui-
sition (GMA) method.
The RRT’s business valuation expert, Robert Reilly, has
authored 12 textbooks on valuation issues and has testified
in court over 150 times. Reilly has helped develop valua­
tion standards for professional organizations such as The
Appraisal Foundation, the American Society of Appraisers, the
American Institute of Certified Public Accountants, and the
National Association of Certified Valuation Analysts. Reilly
opined that the fair value of the shares held by the RRT was
$467 million.
Streck’s valuation expert, Jeffrey Risius, is a principal in
an international financial advisory firm and has been in the
valuation business for almost 30 years. Risius has authored
a book on valuation for the legal profession published by the
business law section of the American Bar Association. Risius
has extensive experience testifying as an expert witness on the
issue of business valuation. Risius opined that the fair value of
the shares held by the RRT was $304 million.
(i) DCF Method
The experts described the DCF method as determining
Streck’s operating cashflow by evaluating financial projections
and discounting Streck’s anticipated earnings to its present
value. The experts evaluated financial projections for three
time periods: 2015 through 2019, 2020 through 2024, and 2025
into perpetuity. The experts considered several factors in cal-
culating an appropriate discount rate. The higher the discount
rate, the lower the valuation.
- 864 -
Nebraska Supreme Court Advance Sheets
308 Nebraska Reports
WAYNE L. RYAN REVOCABLE TRUST v. RYAN
Cite as 308 Neb. 851For the first time period, both experts used the same pro-
jections, completed by Streck’s then-CFO, Morgan, in May
2014 for use in Project Blizzard. Morgan projected that, for
existing products, Streck’s revenues would grow to $148 mil-
lion in 2019. According to the report of the SLC, Connie
expressed confidence that Streck’s financial projections would
be achieved and indicated they are “deliberately conserva-
tive.” For 2013, Streck’s net income exceeded its plan by
$11.5 million. From 2015 through 2017, Streck’s financial
performance exceeded its projections. Reilly used the “deliber-
ately conservative” projections for 2015 through 2019 prepared
by Streck, but Risius used projections that were $10 mil­
lion lower.
For 2020 through 2024, Reilly projected growth rates of
8 percent, 8 percent, 7 percent, 6.5 percent, and 4.5 percent,
respectively. Reilly considered Streck’s historical growth rates
and projections for publicly traded companies which Reilly
concluded were comparable to Streck. Reilly assumed Streck’s
growth rate would decrease on a stairstep basis rather than “fall
off a cliff.” Reilly then applied a 4.5-percent growth rate from
2025 into perpetuity. Reilly admitted that his projected growth
rates were downward assumptions, because Streck’s profits
had consistently increased. In determining a terminal growth
rate of 4.5 percent, Reilly considered Streck’s historic growth
rate and the anticipated industry growth rate, as well as gross
domestic product growth rates and inflation rates. Reilly’s
projected growth rate of 4.5 percent was approximately half
of the industry’s historic growth rates. Reilly explained that a
terminal growth rate of 4.5 percent assumed that Streck will
revert from a period of “supernormal growth” to growing at
the rate of inflation and growth in the economy. Risius applied
a 3-percent growth rate from 2020 into perpetuity, citing risks
such as customer concentration, low growth in hematology,
competition, and patent expirations. The experts’ use of differ-
ent long-term growth rates resulted in a difference in valuation
of approximately $65 million.
- 865 -
Nebraska Supreme Court Advance Sheets
308 Nebraska Reports
WAYNE L. RYAN REVOCABLE TRUST v. RYAN
Cite as 308 Neb. 851Next, the experts calculated a discount rate, or “weighted
average cost of capital.” Reilly applied a discount rate of
11 percent. Reilly’s discount rate was based on the averaged
sum of a 2.8-percent risk-free rate of return, a 5.6-percent
industry-adjusted general equity risk premium, a 2.4-percent
company-size risk premium, and a .5-percent company-specific
risk premium. Reilly applied a company-size risk premium of
2.4 percent, because that is the premium applied to companies
in the eighth decile of the “Size Premia Study.” Based upon
his market analysis, Reilly placed Streck in the eighth decile,
which includes companies valued between $636 million and
$1.05 billion. Reilly also calculated the same discount rate of
11 percent using a buildup model. By applying his projections
and discount rate under the DCF method, Reilly valued Streck
at $707 million.
Risius applied a discount rate of 12.4 percent. Risius ­differed
from Reilly in his selection of a company-size risk premium.
Risius testified that because the market capitalization of Streck
was not available, he could not place Streck in the eighth
decile. Risius reviewed Streck’s financial figures and arrived
at a company-size risk premium of 6 percent. Because 6 per-
cent appeared too high, Risius placed Streck in the “‘micro-
cap’ [decile of] the Size Premia-Study,” which has a premium
of 3.87 percent. The microcap group includes both 9th and
10th decile companies, which have a market capitalization of
between $2 million and $663 million. Finally, the experts used
different company-specific risk premiums, with Risius apply-
ing 1 percent as compared to Reilly’s .5 percent. Under the
DCF method, Risius valued Streck at $456 million.
(ii) GPTC Method
The GPTC method measures the amount that Streck would
trade for based on a comparison of Streck to publicly traded
companies of similar size or profitability in the same line
of business. The measurement of value is based on the mul-
tiples of earnings of comparable publicly traded companies.
For example, if a company’s EBITDA is $10 million and a
- 866 -
Nebraska Supreme Court Advance Sheets
308 Nebraska Reports
WAYNE L. RYAN REVOCABLE TRUST v. RYAN
Cite as 308 Neb. 851buyer makes an offer of $100 million, the offer represents 10
multiples of the company’s EBITDA.
Reilly performed a GPTC analysis of Streck by selecting
publicly traded companies within the same standard industrial
classifications (SIC) codes, codes 2835 and 3826. The U.S.
Department of Labor defines SIC code 2835, entitled “In Vitro
and In Vivo Diagnostic Substances,” as follows:
Establishments primarily engaged in manufacturing in
vitro and in vivo diagnostic substances, whether or not
packaged for retail sale. These materials as chemical,
biological, or radioactive substances used in diagnosing
or monitoring the state of human or veterinary health by
identifying and measuring normal or abnormal constit­
uents of body fluids or tissues.
SIC code 3826, entitled “Laboratory Analytical Instruments,”
is defined as follows: “Establishments primarily engaged in
manufacturing laboratory instruments and instrumentation sys-
tems for chemical or physical analysis of the composition or
concentration of samples of solid, fluid, gaseous, or compos-
ite material.”
Reilly selected six guideline companies within these SIC
codes which had operations comparable to Streck. Each of the
guideline companies Reilly selected were included in valua-
tions conducted by Risius and Empire. Reilly found that Streck
had been growing at a faster rate than the selected companies.
To be conservative, Reilly used pricing multiples that were
approximately 20 percent below the median of the selected
companies. Reilly applied multiples of earnings of between
13.5 and 15 EBITDA to Streck’s financial performance as of
October 2014 and valued Streck under the GPTC method at
$771 million.
Risius’ GPTC companies had an average EBITDA multiple
of 17.1. However, Risius concluded that Streck was not truly
comparable to any of the GPTC companies. Risius therefore
applied an EBITDA multiple of 9.5 and valued Streck under
the GPTC method at $487 million.
- 867 -
Nebraska Supreme Court Advance Sheets
308 Nebraska Reports
WAYNE L. RYAN REVOCABLE TRUST v. RYAN
Cite as 308 Neb. 851The RRT adduced evidence that for tax purposes, sepa-
rate from the valuation proceedings, Risius’ firm performed
a valuation of Streck as of July 2014. Risius’ firm applied
multiples for Streck which, if applied by Risius in this case,
would increase Risius’ value under the GPTC method by
$172 million.
(iii) GMA Method
Under the GMA method, both Reilly and Risius conducted a
search of publicly available information regarding mergers and
acquisitions of companies similar to Streck. Reilly selected 10
mergers and acquisitions involving companies in the same SIC
codes as Streck, and then selected the median of the multiples
of earnings reflected in those transactions. Reilly applied those
multiples to Streck’s financial metrics and valued Streck at
$704 million. Risius found that given the uniqueness of Streck,
there are few, if any, comparable sale transactions for consider-
ation. Risius instead primarily relied upon the LOI’s obtained
during Project Blizzard to determine a value for Streck. Based
on the median of the three LOI’s, Risius arrived at a value of
$545 million.
(iv) “S Corp Premium”
Each method employed by the experts measures the value
of a subchapter C corporation. Because Streck is a subchapter
S corporation, the experts agreed that applying an “S Corp
premium” is necessary to reflect the value of the economic
benefits associated with Streck’s status as an S corporation.
Both experts utilized the S corporation economic adjust-
ment model method. Reilly, after considering other additional
methods, concluded that the appropriate premium was 14 per-
cent. Risius also concluded that the appropriate premium was
14 percent. However, due to the risk that Streck could elect to
become a C corporation in the future, Risius adjusted the pre-
mium to 7.1 percent. This adjustment reduced Risius’ valuation
by $32 million.
- 868 -
Nebraska Supreme Court Advance Sheets
308 Nebraska Reports
WAYNE L. RYAN REVOCABLE TRUST v. RYAN
Cite as 308 Neb. 851(v) Valuation Conclusions
As a final step to determine fair value, the experts added
Streck’s $76,495,000 in cash and marketable securities as of
October 2014. Reilly valued Streck under the three methods at
$717 million, applied a 14-percent S Corp premium, and added
Streck’s cash to conclude that the fair value of Streck was
$893 million. Reilly opined that the fair value of the RRT’s
52.275 percent ownership interest was $467 million.
Risius applied a 7-percent S Corp premium to only his
valuation under the DCF method and then synthesized his
valuations under the three methods to arrive at a value of
$505 million. After adding Streck’s cash, Risius valued Streck
at approximately $581 million and found the rounded fair value
of the shares held by the RRT to be $304 million.
(b) John Riddle
The court heard testimony from the RRT’s expert witness
John Riddle, an experienced investment banker who special-
izes in the diagnostic health care industry. Riddle’s experience
includes developing and evaluating financial projections in
connection with mergers and acquisitions. Riddle explained
that as of October 2014, the health care life sciences market
was growing at or over 7 percent. He testified that Streck was
growing over the industry’s trend, that Streck had a strong
profile for growth as compared to the market, and that, due to
its positioning, Streck had “niche market dominance.” Riddle
stated that “there is no other company like Streck in America
certainly, and perhaps in the world.” Utilizing Streck’s projec-
tions, Riddle conducted a leveraged buyout analysis which
valued Streck at between $646 million and $742 million before
considering an S Corp premium or adding back cash.
Riddle opined that Project Blizzard was a flawed and failed
process. Riddle stated that he expected to see offers “sev-
eral hundred million dollars” higher than the LOI’s Streck
received. Riddle testified that Streck’s growth projections were
too conservative and were not properly characterized to the
- 869 -
Nebraska Supreme Court Advance Sheets
308 Nebraska Reports
WAYNE L. RYAN REVOCABLE TRUST v. RYAN
Cite as 308 Neb. 851prospective buyers during Project Blizzard. Riddle criticized
Streck’s choice of investment banker given the banker’s lack
of experience in the diagnostic health care market; Streck’s
decision to exclude GTCR, the highest bidder in round one;
and Streck’s instruction of terms in bid instruction letters, such
as a reverse breakup fee and a preference to use low amounts
of leverage, which Riddle contended chilled interest and drove
down the price.
Streck did not rebut Riddle’s testimony with any testi-
mony of comparable expertise. Streck called investment banker
James Calandra as an expert witness, but due to his lack of
relevant experience, Calandra was not permitted to offer any
opinions regarding Streck’s value within the diagnostic health
care industry.
5. District Court’s Findings
On July 23, 2019, the district court issued its posttrial opin-
ion and order. The court adopted the RRT’s 74-page proposed
findings verbatim, while adding the statutory definition of
“[f]air value” under § 21-2,171. Thus, the court adopted the
valuation and testimony of the RRT’s expert witnesses Reilly
and Riddle and rejected the testimony of Streck’s expert wit-
ness Risius.
(a) Fair Value
The court found that the RRT met its burden of proving
the fair value of its shares. The court found that (1) Reilly’s
projections of Streck’s revenue and income were in line with
Streck’s projections and prospects for growth, (2) Reilly’s
long-term growth rate of 4.5 percent was reasonable, (3)
Reilly’s selected company-size risk premium and company-
specific risk premium were reasonable, (4) Reilly’s selected
multiples of earnings from GPTC companies were reasonable
and in line with companies in Streck’s industry, and (5) Reilly
“credibly and convincingly testified” that no rational company
would convert from an S corporation to a C corporation prior
- 870 -
Nebraska Supreme Court Advance Sheets
308 Nebraska Reports
WAYNE L. RYAN REVOCABLE TRUST v. RYAN
Cite as 308 Neb. 851to a sale. The court found that “Riddle credibly testified that
several aspects of Project Blizzard served to limit the price
offered for Streck.”
The court found that Risius’ “downward bias” rendered his
valuation under the DCF method “inherently unreliable.” The
court found that Risius’ explanations for his projections were
“misleading and not credible.” The court found that Risius
“double-counted” the same risks to justify his projections and
selected company-specific risk premium. The court found that
Risius’ explanation of his company-size risk premium was not
credible. The court found Risius’ valuations under the GPTC
method and the GMA method reflected a downward bias. The
court found that Risius’ “arbitrary halving of the S Corp pre-
mium reflects his downward bias.” The court found that Risius’
downward bias “renders his conclusion unreliable.”
The court also found that the equities of the case favored
Reilly’s valuation, because Dr. Ryan founded Streck and devel-
oped the technology upon which the company was built and
he established Streck’s relationship with its largest customer.
The court stated that pursuant to Rigel Corp., a fair value
determination should attempt to measure what Dr. Ryan lost. 4
The court found that Dr. Ryan’s loss of his interest in Streck
“was substantial, and that is reflected in the fair value of his
shares as determined by Reilly.” The court found that Dr. Ryan
was justified in not agreeing to a sale during Project Blizzard,
because Dr. Ryan was shut out of the process and had warned
that he was not supporting Project Blizzard. Thus, the court
found that it was “not a surprise that Dr. Ryan would not
approve a sale to the Project Blizzard buyers.”
(b) Prejudgment Interest
The court found that the RRT was entitled to an award
of prejudgment interest pursuant to § 21-20,166(5)(a), which
states in part:
4
See Rigel Corp., supra note 2.
- 871 -
Nebraska Supreme Court Advance Sheets
308 Nebraska Reports
WAYNE L. RYAN REVOCABLE TRUST v. RYAN
Cite as 308 Neb. 851Interest may be allowed at the rate specified in sec-
tion 45-104, [12 percent per annum,] as such rate may
from time to time be adjusted by the Legislature, and
from the date determined by the court to be equitable,
but if the court finds that the refusal of the petitioning
shareholder to accept an offer of payment was arbitrary or
otherwise not in good faith, no interest shall be allowed.
The court found that, under § 21-20,166(5)(a), there was
no evidence that the RRT refused an offer of payment arbi-
trarily or in bad faith. The court found that the RRT should
be awarded prejudgment interest commencing on the date
Streck filed its election to purchase, January 19, 2015, through
the time of Streck’s purchase. In so ruling, the court rejected
Streck’s arguments opposing a prejudgment interest award.
Streck argued that the award of prejudgment interest was
controlled by Neb. Rev. Stat. § 45-103.2 (Reissue 2010) and
that the RRT failed to satisfy the procedural requirements of
§ 45-103.2. Streck argued the court was precluded from award-
ing prejudgment interest on an unliquidated amount. The court
found Streck’s arguments to be without merit, because in a
fair value proceeding regarding the petitioning shareholder’s
shares, the award of prejudgment interest is governed by
§ 21-20,166(5)(a), which specifically references Neb. Rev.
Stat. § 45-104 (Reissue 2010), not § 45-103.2. The court found
“the procedural requirements set forth in § 45-103.02, when
viewed in the context of § 21-20,166, do not make sense and
are clearly not applicable.” The court found the amount at issue
in a fair value proceeding is contested and therefore will be
unliquidated. Lastly, the court found no merit to Streck’s argu-
ments that prejudgment interest should not be awarded due to
the RRT’s challenge of Streck’s election to purchase and due
to the RRT’s lack of objection to Stacy’s attempt to intervene
in the case.
6. Posttrial
Following trial, the RRT moved for a final order direct-
ing Streck’s purchase pursuant to § 21-20,166(5)(a), which
- 872 -
Nebraska Supreme Court Advance Sheets
308 Nebraska Reports
WAYNE L. RYAN REVOCABLE TRUST v. RYAN
Cite as 308 Neb. 851states that “[u]pon determining the fair value of the shares,
the court shall enter an order directing the purchase upon such
terms and conditions as the court deems appropriate . . . .”
The court held a hearing on the motion on August 12, 2019,
at which Streck requested to make installment payments. On
September 13, the court granted the RRT’s motion and ordered
Streck to pay the fair value portion of the judgment within
10 days.
The court found that Streck represented at an August 2018
hearing that it was ready to purchase the RRT’s shares. The
court found that Streck’s SLC considered the affordability of
the judgment in its January 2015 report when it recommended
that Streck purchase Dr. Ryan’s shares. The court found the
SLC report contained assurances from Streck’s CEO and
then-CFO that Streck could afford the entire judgment through
a combination of cash, borrowing, and, if necessary, private
equity investment. The court found the evidence demonstrated
that Streck had secured the ability to pay for the fair value
of the RRT’s shares in full as of January 2015 and that there
was no credible evidence Streck could not purchase the RRT’s
shares. The court found it “particularly troublesome” that, if
Streck’s argument were accepted, Streck would not be able to
afford even the valuation of its own expert. The court found
that this alone demonstrated that Streck had come before it
“with unclean hands.” The court awarded the RRT prejudg-
ment interest in the amount of approximately $256 million for
the period of January 19, 2015, through August 12, 2019. The
court dismissed the RRT’s petition for dissolution.
Streck moved for a new trial. Connie moved for a new trial
and moved to alter or amend. The court denied the motions.
Streck filed an appeal, and we granted the parties’ request
for bypass.
II. ASSIGNMENTS OF ERROR
Streck assigns, restated and summarized, that the district
court erred in (1) adopting the RRT’s proposed findings,
- 873 -
Nebraska Supreme Court Advance Sheets
308 Nebraska Reports
WAYNE L. RYAN REVOCABLE TRUST v. RYAN
Cite as 308 Neb. 851(2) valuing the RRT’s shares, (3) awarding prejudgment
interest, and (4) refusing Streck’s request to make install-
ment payments.
Connie filed a brief asserting assignments of error which
overlap with and reiterate Streck’s arguments regarding the
court’s valuation and order directing purchase. However,
although Connie was the principal defendant in the RRT’s peti-
tion and she filed a motion requesting that the court determine
the fair value of the RRT’s shares, Connie did not file an elec-
tion to purchase any shares under § 21-2,201(d). Therefore,
Connie, in her individual capacity, is not a proper party to
these proceedings. 5
III. STANDARD OF REVIEW
[1,2] A proceeding to determine the fair value of a petition-
ing shareholder’s shares of stock is equitable in nature. 6 An
appellate court reviews an equitable action de novo on the
record and reaches a conclusion independent of the factual
findings of the trial court; however, where credible evidence
is in conflict on a material issue of fact, the appellate court
considers and may give weight to the circumstance that the
trial court heard and observed the witnesses and accepted one
version of the facts rather than another. 7
[3] Statutory interpretation is a matter of law, in connection
with which an appellate court has an obligation to reach an
independent, correct conclusion irrespective of the determina-
tion made by the court below. 8
[4] Awards of prejudgment interest are reviewed de novo. 9
5
See Anderson v. A & R Ag Spraying & Trucking, 306 Neb. 484, 946
N.W.2d 435 (2020).
6
See, id.; Rigel Corp., supra note 2.
7
Id.8
Id.9
AVG Partners I v. Genesis Health Clubs, 307 Neb. 47, 948 N.W.2d 212(2020); Weyh v. Gottsch, 303 Neb. 280, 929 N.W.2d 40 (2019).
- 874 -
Nebraska Supreme Court Advance Sheets
308 Nebraska Reports
WAYNE L. RYAN REVOCABLE TRUST v. RYAN
Cite as 308 Neb. 851IV. ANALYSIS
1. Adoption of Proposed Findings
As a threshold matter, Streck argues that by adopting the
RRT’s posttrial proposed findings nearly verbatim, the court
erred because it failed to independently review all of the rel-
evant evidence. In response, the RRT argues that where one
party’s submission credibly establishes the merits of the case,
and the other party’s does not, the court may adopt the cred-
ible submission.
[5-8] A trial court in a case tried to the court without a
jury may adopt a party’s proposed findings of fact verbatim
provided that the findings and conclusions reflect the court’s
independent view and judgment of the evidence. 10 Although
findings drawn by the trial court itself are more helpful to
the appellate court, findings prepared by counsel and adopted
verbatim by the trial judge are formally the judge’s and will
stand if supported by evidence. 11 The adoption of a party’s
proposed findings does not require an appellate court to set
aside the deference ordinarily given to the trial judge’s factual
findings. 12 When accepting a party’s proposed findings, minor
mistakes that do not prejudice a party constitute harmless error;
however, a trial court may commit error if the proposed facts
or law are unsupported by the evidence and cause prejudice. 13
The critical inquiry is whether such findings, as adopted by the
court, are clearly erroneous. 14
10
89 C.J.S. Trial § 1261 (2012).
11
See United States v. El Paso Gas Co., 376 U.S. 651, 84 S. Ct. 1044, 12 L.
Ed. 2d 12 (1964); 75B Am. Jur. 2d Trial § 1596 (2018). See, also, In re
Estate of Lane, 39 Kan. App. 2d 1062, 188 P.3d 23 (2008).
12
See, In re Estate of Lane, supra note 11; Indiana Industries, Inc. v. Wedge
Products, 430 N.E.2d 419 (Ind. App. 1982).
13
In re H.M., 2014 Ohio 755, 9 N.E.3d 470 (2014). See In re M.B., 709
N.W.2d 11 (N.D. 2006).
14
See, In re M.B., supra note 13; Bluford v. Wells Fargo Fin. Ohio 1, Inc.,
176 Ohio App. 3d 500, 892 N.E.2d 920 (2008).
- 875 -
Nebraska Supreme Court Advance Sheets
308 Nebraska Reports
WAYNE L. RYAN REVOCABLE TRUST v. RYAN
Cite as 308 Neb. 851In one of the leading state court cases on this issue, Uptime
Corp. v Colorado Research Corp., 15 the Supreme Court of
Colorado held that when a trial judge signs findings prepared
by counsel for the prevailing party, the correctness of the find-
ings becomes the judge’s responsibility, and the appellate court
will presume that the trial judge examined the proposed find-
ings and agreed that they correctly stated the facts as the judge
found them to be. Moreover, independent of any presump-
tion, appellate courts have remarked that when a trial court
makes changes to the proposed findings, that is an indication
the trial court considered the findings before adopting them
and read, analyzed, and agreed with the findings that were
left unchanged. 16
Here, we find no merit to Streck’s assertion that the court
did not exercise independent judgment as the finder of fact.
The record demonstrates that the court carefully considered the
issues and provided thorough reasons for its decision. Although
Streck identifies certain isolated findings which it claims are
not correct, a court errs in adopting a party’s proposed findings
only if the findings are unsupported by the evidence and cause
prejudice. 17 Streck’s assignment of error here fails because,
even if Streck has identified mistakes in the court’s findings,
when the trial record regarding valuation is considered as a
whole, Streck has failed to demonstrate that it suffered any
prejudice as a result of any erroneous findings.
Streck claims the court should not have referenced Riddle’s
testimony that at the time of trial, Streck was valued at over
$1 billion. Streck is correct that the relevant valuation date
is October 29, 2014, and not the 2018 trial date. However,
the court’s findings made this clear by stating that “the Court
fixed the valuation date as October 29, 2014.” The court
15
Uptime Corp. v. Colorado Research Corp., 161 Colo. 87, 420 P.2d 232(1966).
16
See, Harris v. AHTNA, Inc., 193 P.3d 300 (Alaska 2008); Stevens v.
Humana of Delaware, Inc., 832 P.2d 1076 (Colo. App. 1992).
17
See In re H.M., supra note 13.
- 876 -
Nebraska Supreme Court Advance Sheets
308 Nebraska Reports
WAYNE L. RYAN REVOCABLE TRUST v. RYAN
Cite as 308 Neb. 851was merely referencing the RRT’s argument for a different
valuation date.
Streck claims the court erred by referencing the valuation
conducted by Carson. In its posttrial findings, the court listed
the Carson valuation as an indication of value obtained prior to
the commencement of Project Blizzard. We agree with Streck
that in this isolated finding, the court misstated the amount of
the Carson valuation. Based on our review of the evidence,
Carson valued Streck at $705 million rather than $850 million
as stated by the court. However, we find the court’s error to
be harmless, because it is undisputed that the court received
Carson’s valuation for the limited purpose of showing Carol’s
state of mind early in the sales process. Additionally, the record
indicates that the court considered the Carson valuation for the
sole and limited purpose of an indication of value which Carol
became aware of in early 2014. Therefore, even if Streck has
identified a mistake in the court’s adopted findings, there is
no evidence that this particular finding played a material role
in the court’s valuation analysis such that Streck suffered any
unfair prejudice.
Additionally, Streck assigns that the court erred by denying
its request to include the RRT’s posttrial proposed findings
in the record for purposes of appeal. While the court did not
receive the RRT’s findings as substantive evidence for pur-
poses of considering Streck’s motion for a new trial, Streck
did mark the RRT’s proposed findings as an exhibit and that
exhibit does appear in our record on appeal. This assignment
of error is without merit.
2. Fair Value of the RRT’s Shares
Streck argues that the court erred in determining the fair
value of the RRT’s shares to be $467 million. All of Streck’s
arguments on the issue of fair value are based upon the testi-
mony of Risius or the Project Blizzard LOI’s, which Streck
argues are the best indicia of value in the record. Streck
argues that the court erred in adopting Reilly’s valuation,
because Reilly improperly assumed synergies; Reilly did not
- 877 -
Nebraska Supreme Court Advance Sheets
308 Nebraska Reports
WAYNE L. RYAN REVOCABLE TRUST v. RYAN
Cite as 308 Neb. 851consider the Project Blizzard LOI’s; and at one point in his
testimony, Reilly discussed fair market value rather than fair
value. Streck claims that it has identified errors in Reilly’s cal-
culations, as adopted by the court, with respect to each valua-
tion method and the application of the S Corp premium.
[9,10] This court has previously stated that in determining
the fair value of a petitioning shareholder’s stock, the “‘real
objective is to ascertain the actual worth of that which the
[shareholder] loses.’” 18 Such a determination is to be based
on all material factors and elements that affect value, given to
each the weight indicated by the circumstances. 19 Under this
analysis, the court may consider the nature of the business and
its operations, its assets and liabilities, its earning capacity, the
investment value of its stock, the market value of the stock,
the price of stocks of like character, the size of the surplus,
the amount and regularity of dividends, future prospects of the
industry and of the company, and good will, if any. 20
[11-13] The determination of the weight that should be given
expert testimony is uniquely the province of the fact finder. 21
The trial court is not required to accept any one method
of stock valuation as more accurate than another account-
ing procedure. 22 A trial court’s valuation of a closely held
corporation is reasonable if it has an acceptable basis in fact
and principle. 23
18
Rigel Corp., supra note 2, 245 Neb. at 127, 511 N.W.2d at 524 (quoting
Warren v. Balto. Transit Co., 220 Md. 478, 154 A.2d 796 (1959)). See
Anderson, supra note 5.
19
See, id. See, also, Athlon Sports Communications v. Duggan, 549 S.W.3d
107 (Tenn. 2018); Belk of Spartanburg, S.C. v. Thompson, 337 S.C. 109,
522 S.E.2d 357 (S.C. App. 1999); Walter S. Cheesman Realty Co. v.
Moore, 770 P.2d 1308 (Colo. App. 1988).
20
See id.21
Anderson, supra note 5; Fredericks Peebles v. Assam, 300 Neb. 670, 915
N.W.2d 770 (2018).
22
Anderson, supra note 5.
23
Id.- 878 -
Nebraska Supreme Court Advance Sheets
308 Nebraska Reports
WAYNE L. RYAN REVOCABLE TRUST v. RYAN
Cite as 308 Neb. 851[14-16] A judicial valuation of corporate stock presents
unique challenges which are “complicated by ‘the clash of
contrary, and often antagonistic, expert opinions of value,’
prompting the trial court to wade through ‘widely divergent
views reflecting partisan positions’ in arriving at its determina-
tion of a single number for fair value.” 24 While discharging its
statutory mandate to value a shareholder’s stock, it is entirely
proper for a trial court to adopt one expert’s model, methodol-
ogy, and calculations if they are supported by credible evidence
and the judge analyzes them critically on the record. 25 As long
as they are supported by the record, an appellate court may
defer to the trial court’s factual findings in a statutory corporate
stock valuation proceeding, even if the appellate court might
independently reach a different conclusion. 26
Upon our de novo review of the record and consider-
ing Streck’s arguments on appeal, we conclude that the trial
court’s valuation is reasonable and has an acceptable basis in
fact and principle. We conclude the court did not err in find-
ing Reilly’s valuation testimony to be reasonable and credible,
in finding that Risius’ testimony was not credible or reliable,
and in giving weight to Riddle’s unrefuted testimony that
the Project Blizzard LOI’s were not a reliable indication of
Streck’s value.
In our valuation analysis, we discuss the experts’ valuations,
the court’s credibility findings, and the expert and lay testi-
mony regarding the dysfunctional nature of Project Blizzard.
(a) Reilly and Risius
Reilly and Risius used the same valuation methods and
approaches. Both experts found it appropriate to perform the
DCF method, the GPTC method, and the GMA method and
to apply an S Corp premium and add back Streck’s cash. The
24
Dell v. Magnetar Global Master Fund, 177 A.3d 1, 22 (Del. 2017),
quoting Matter of Shell Oil Co., 607 A.2d 1213 (Del. 1992).
25
Golden Telecom, Inc. v. Global GT LP, 11 A.3d 214 (Del. 2010).
26
Id.- 879 -
Nebraska Supreme Court Advance Sheets
308 Nebraska Reports
WAYNE L. RYAN REVOCABLE TRUST v. RYAN
Cite as 308 Neb. 851experts disagreed in their selection of data. A comparison of
the experts’ financial projections under the DCF method dem-
onstrates the nature and extent of the experts’ disagreements.
Reilly used Streck’s projections for 2015 through 2019,
which showed approximately 10 percent growth each year.
Reilly observed that in actual performance during this period,
Streck’s revenue grew approximately 15 percent each year.
Noting Connie’s statement that Streck’s projections were
“deliberately conservative,” Reilly stated that Streck is “a lot
more profitable than the projections indicate.” During trial,
the court specifically noted that “it’s been established through
the evidence that the projections that this company has made
historically up to the valuation date were extremely conserva-
tive.” Conversely, Risius used short-term projections that were
$10 million lower than Streck’s projections.
Regarding the experts’ selected long-term projections, Reilly
opined that Streck’s growth rate would gradually decline over
5 years until it reached 4.5 percent. Reilly’s projections were
similar to those used by Empire in its valuation for the SLC.
Reilly explained that this figure was less than half of Streck’s
historic growth rate and less than half of the industry’s growth
rate. Reilly stated that by using lower projections, he accounted
for risks such as competition and patent expirations.
Risius selected a long-term growth rate of 3 percent. Part of
Risius’ reasoning for using lower projections was to account
for risks such as customer concentration, new competition, pat-
ent expirations, and Streck’s already dominant position in the
hematology market.
[17] Streck claims that the court erred by crediting Reilly’s
projections, because Reilly improperly assumed that Streck
would overcome risks due to synergies created by the transac-
tion. The valuation of corporate shares is to be made without
consideration of any increase in value resulting from the
transaction itself. 27 We disagree with Streck’s characterization
27
See, Dell, supra note 24; Union Illinois v. Union Financial Group, 847
A.2d 340 (Del. Ch. 2004).
- 880 -
Nebraska Supreme Court Advance Sheets
308 Nebraska Reports
WAYNE L. RYAN REVOCABLE TRUST v. RYAN
Cite as 308 Neb. 851of Reilly’s testimony and the trial court’s findings. The court
did not factor synergies into its valuation, and further, there is
no evidence that Reilly considered synergies in his testimony.
The court merely found that Risius did not credibly value risks
and that his projections were “misleading.” Reilly’s projec-
tions accounted for risks by using growth rates lower than
the historic rates of Streck and Streck’s industry. Moreover,
contrary to Streck’s argument that Reilly assumed synergies,
there is evidence that Reilly was conservative in his valuation.
Reilly based his first 5 years of his DCF analysis, and por-
tions of his GPTC analysis, on Streck’s “deliberately conserv­
ative” projections. Additionally, Streck’s projections did not
include anticipated growth from BCT sales. There is no merit
to Streck’s claim that the court increased its valuation based
on synergies.
Streck argues that Reilly’s valuation is an outlier and that
according to the Supreme Court of Delaware’s decision in Dell
v. Magnetar Global Master Fund, 28 the district court erred by
not giving greater weight to the Project Blizzard LOI’s. Streck
argues that the court should have given greater weight to the
post-Project Blizzard IOI’s as well.
In Dell, after a company’s board approved a merger, stock-
holders demanded a court-conducted appraisal. The court
found that the evidence regarding the sales process failed to
establish a reliable indication of fair value, because the inves-
tors myopically accepted a low offer due to their focus on
short-term profits. The court stated that it could not quantify
how the process affected the price, and therefore, it gave
the transaction price no weight when determining fair value
and rendered a valuation exclusively based on its own DCF
analysis. While recognizing that an appraisal is “‘by design,
a flexible process,’” 29 and that there is no presumption in
favor of the deal price, 30 the appellate court reversed, finding
28
Dell, supra note 24.
29
Id. at 24, quoting Golden Telecom, Inc., supra note 25.
30
See Dell, supra note 24.
- 881 -
Nebraska Supreme Court Advance Sheets
308 Nebraska Reports
WAYNE L. RYAN REVOCABLE TRUST v. RYAN
Cite as 308 Neb. 851that the trial court’s reasoning was not grounded in the record.
The appellate court found that the record showed the market
analysts in the merger process understood the company’s long-
term outlook and that based on the evidence, the transaction
price was entitled to heavy, if not overriding, weight in estab-
lishing fair value. The appellate court endorsed the efficient
market hypothesis, which “teaches that the price produced by
an efficient market is generally a more reliable assessment
of fair value than the view of a single analyst, especially an
expert witness who caters her valuation to the litigation imper-
atives of a well-heeled client.” 31 The court noted, however, in
the scenario in which there is reason to suspect that market
forces cannot be relied upon, a DCF analysis provides the
court with helpful data about the price a sales process would
have produced. 32
The circumstances in Dell are much different than those
in the present case. As Streck acknowledges, rather than
affording the LOI’s no weight, the court here found that the
LOI’s created a floor for its valuation analysis. The record
shows the court considered the highest LOI, submitted by
The Carlyle Group, in the amount of $590 million. This LOI,
after applying an S Corp premium and adding Streck’s cash,
represented a value of $749 million. The record further shows
that the court similarly considered and weighed the post-
Project Blizzard IOI submitted by GTCR. This IOI, taking
the high number in the range, $675 million, and applying an
S Corp premium and adding Streck’s cash, represented a value
of $846 million. Thus, while Reilly’s valuation of Streck at
$893 million is higher, Reilly’s valuation is not as much of
an outlier as Streck argues. Reilly measured Streck’s value
using reasonable GPTC companies, also selected by Risius
and Empire. Reilly’s valuation reflects Streck’s status as a
market leader and innovator with tremendous prospects for
31
Id. at 24.
32
See, Dell, supra note 24; M.P.M. Enterprises, Inc. v. Gilbert, 731 A.2d 790(Del. 1999).
- 882 -
Nebraska Supreme Court Advance Sheets
308 Nebraska Reports
WAYNE L. RYAN REVOCABLE TRUST v. RYAN
Cite as 308 Neb. 851continued financial growth. By contrast, Risius used multiples
that were inconsistent with a recent valuation of Streck con-
ducted by Risius’ firm, which reduced Risius’ valuation under
the GPTC method by $172 million. The court considered and
weighed Reilly’s valuation, Risius’ valuation, and the Project
Blizzard LOI’s. Streck has failed to prove that the court erred
in not affording greater weight to the Project Blizzard LOI’s.
Streck’s reliance on Dell is misplaced.
Additionally, as Reilly explained regarding the Project
Blizzard LOI’s, “[t]here were no completed transactions, nor
[was] there anything, in my opinion, close to completed trans-
actions for which I could actually extract pricing evidence.”
Streck planned to wait to begin the process of drafting a stock
purchase agreement until after it received an acceptable LOI.
Had a Project Blizzard LOI been accepted, there was confirma-
tory diligence and closing yet to be completed. More important
though, there is extensive evidence in the record that Project
Blizzard was defective and did not reliably reflect the market’s
view regarding Streck’s value.
As illustrated below through witness testimony, the sales
process was flawed due to the use of tempered financials and
restricting the majority shareholder’s information and partici-
pation. Among the reasons for Project Blizzard’s failure, Reilly
noted in his report that Project Blizzard “may have been half-
heartedly undertaken by Streck” and that Streck’s engagement
of an investment banker may have been “just a charade.” Not
even Risius credited the LOI’s with the value Streck contends
they should have. Streck has failed to show that the LOI’s
deserve greater consideration.
Streck also claims that Reilly failed to testify as to fair
value, because at one point he referenced the standard for fair
market value. The record is clear that the court’s valuation
did not rely upon this fleeting testimony. Streck’s argument is
without merit.
Streck further claims that Reilly’s testimony contains sev-
eral identifiable errors. As previously mentioned, in addition
to their disagreement regarding Streck’s financial projections,
- 883 -
Nebraska Supreme Court Advance Sheets
308 Nebraska Reports
WAYNE L. RYAN REVOCABLE TRUST v. RYAN
Cite as 308 Neb. 851the experts disagreed on their calculation of a discount rate
under the DCF method, their valuations under the GPTC
method and the GMA method, and their application of an
S Corp premium.
Regarding the DCF method, Streck argued that the court
erred by adopting Reilly’s 4.5 percent terminal growth rate
instead of Risius’ 3 percent and by adopting Reilly’s 2.36 per-
cent company-size risk premium instead of Risius’ 3.87 per-
cent. Streck argued that Reilly’s GPTC analysis was flawed
because of Reilly’s use of higher multiples; selection of com-
panies significantly larger than Streck; and giving equal weight
to the GPTC method and the DCF and GMA methods, when
there are no companies which are truly comparable to Streck.
Streck argued that Reilly’s GMA analysis ignored the LOI’s
and that Reilly’s application of the full 14 percent S Corp pre-
miums ignored risks specific to Streck.
The court considered each area of disagreement between the
valuation experts and found Reilly’s valuation to be reasonable
and supported by the evidence. The court found that each part
of Risius’ analysis in his valuation, including his projections
and calculation of a discount rate under the DCF method, his
GPTC and GMA methods, and his “arbitrary halving of the
S Corp premium,” reflected a downward bias which rendered
his conclusions unreliable. Here, we find the expert testimony
raised evidence in conflict on material issues of fact regard-
ing the valuation of Streck’s stock. Where credible evidence
is in conflict on material issues of fact, the reviewing court
may consider and give weight to the fact that the trial court
observed the witnesses and accepted one version of the facts
over another. 33 Therefore, although Streck devoted much of its
brief to identifying errors in Reilly’s testimony, Streck’s argu-
ments lack merit because they are based on Risius’ testimony,
and the court made detailed findings that Risius’ testimony
lacked credibility. Upon de novo review, giving weight to
33
See Anderson, supra note 5; Assam, supra note 21.
- 884 -
Nebraska Supreme Court Advance Sheets
308 Nebraska Reports
WAYNE L. RYAN REVOCABLE TRUST v. RYAN
Cite as 308 Neb. 851the trial court’s judgment as to credibility, we find that the
record supports the district court’s findings regarding valua-
tion. Again, we are not persuaded by Streck’s reassertion of
Risius’ discredited testimony.
Having discussed the testimony of Risius, Streck’s only
remaining source of evidence regarding valuation is the Project
Blizzard LOI’s. We discuss the unrefuted testimony of the
RRT’s expert Riddle and lay witness testimony to demonstrate
that the Project Blizzard LOI’s are not reliable indications of
fair value.
(b) Riddle
Riddle, an investment banker who specializes in the diag-
nostic health care industry, evaluated Streck’s projections and
the Project Blizzard sales process. Riddle opined that Streck’s
growth was described too conservatively to buyers and that
the sales process was flawed and yielded a flawed result.
Apart from stating the obvious that Project Blizzard did not
result in a successful sale, Riddle criticized Project Blizzard
in the following areas: (i) Streck’s partnership with its invest-
ment banker, (ii) Streck’s decision to exclude GTCR, and (iii)
Streck’s depression of value through bid instruction terms. The
court found that Riddle credibly testified that several aspects of
Project Blizzard limited the price offered for Streck.
(i) Streck’s Partnership With
Investment Banker
Streck’s investment banker contacted 14 prospective buyers
for Project Blizzard. Ten buyers submitted IOI’s. Streck and its
investment banker met with six buyers, all of which submit-
ted second round IOI’s. The third round yielded three LOI’s.
There is evidence that Connie and Dr. Ryan both thought the
process was not run well and lacked confidence in the result.
At a June 2014 board of directors’ meeting, Connie addressed
the board regarding the performance of Streck’s investment
banker as an advisor and partner. Connie announced that
the investment banker’s managing director is a “very poor
- 885 -
Nebraska Supreme Court Advance Sheets
308 Nebraska Reports
WAYNE L. RYAN REVOCABLE TRUST v. RYAN
Cite as 308 Neb. 851communicator.” She stated that the investment banker has not
been a partner in the sales process and has not provided rea-
sons why Streck should choose one buyer over another. Connie
stated that she did not find the investment banker to be help-
ful or knowledgeable within Streck’s industry, even though it
claimed to be an expert in health care. Connie stated, regarding
the investment banker, that “as an advisor, I feel we have been
left completely on our own.” While acknowledging Connie’s
concerns, Gartlan stated that the board was “too far into it to
do anything different.” The board then ratified the investment
banker’s engagement letter. In doing so, the board discussed
and considered the possible outcome that Streck would not
be sold, and it confirmed that if a sale did not occur, Streck
would owe the investment banker a fee of $200,000, plus com-
mission rights up to 1 year from termination.
Based on this evidence, Riddle opined that the statements
of Streck’s founder and CEO showed that Streck was disap-
pointed with its investment banker and the strength of the sales
process. Riddle stated that therefore, “it was almost predict-
able that [Project Blizzard] did not yield the kind of results
necessary to get to and the kind of value necessary to get to
a transaction.”
Riddle opined that the termination of Project Blizzard did
not have to end the sales process. As an investment banker,
Riddle stated that Streck did not get a fair assessment of the
market and could do better if exposed to more buyers.
(ii) GTCR
Of the Project Blizzard buyers, Riddle viewed GTCR as
the company which offered the best price and was in the best
position to succeed with Streck. In 2014, immediately prior
to Project Blizzard, GTCR launched a new 10-year fund of
nearly $4 billion and was looking to invest in a platform
company. Riddle stated that the long investment window fit
well with Streck’s needs as a closely held family company,
because there would be less pressure to sell with the oppor-
tunity to grow the investment over time. Riddle stated that, at
- 886 -
Nebraska Supreme Court Advance Sheets
308 Nebraska Reports
WAYNE L. RYAN REVOCABLE TRUST v. RYAN
Cite as 308 Neb. 851minimum, as the highest bidder in round one with an IOI of
$575 million to $625 million, GTCR should have advanced in
the process if only to drive up the other bids. The record shows
that the midpoint of GTCR’s bid in round one was $600 mil-
lion and that after Project Blizzard, GTCR increased its offer
to $625 million to $675 million. The exclusion of GTCR from
Project Blizzard reveals the arbitrary nature of the decision-
making process.
(iii) Bid Instruction Terms
Riddle opined that the inclusion of a reverse breakup fee and
a preference for low leverage in Project Blizzard bid instruc-
tions chilled interest and repressed price. According to the
testimony of Riddle, as well as Uphoff, a breakup fee is money
damages one party pays to another in the event the transaction
is not completed. A reverse breakup fee places responsibility
for money damages with the prospective buyer. Each of the
final LOI’s included reverse breakup fees of $20 million to
$30 million. Riddle testified that based on his experience, such
a fee is not customary in this type of sales process. Riddle did
not focus on the amount of the fee, but stated that the fact that
the fee was included at all chilled interest and depressed value,
because it increased financial risk to the prospective buyers.
Riddle stated that in this case, the prospective buyers still
had substantial due diligence to be completed, and that such
unknowns can cause buyers to bid conservatively.
Riddle testified that Streck further created a chilling effect
by requesting bids which limited leverage to four times
EBITDA. The final LOI’s agreed to limit leverage to five
times EBITDA. Riddle testified that, in and of itself, a prefer-
ence for less leverage is not necessarily a problem, but it does
send a message to prospective buyers that financing will be
constrained and that bids using higher amounts of leverage will
not be well received. Both Streck’s then-CFO, Morgan, and
Streck’s investment banker acknowledged that a higher amount
of leverage correlates with a higher bidding price. Based on
his experience, Riddle opined that a company with the level
- 887 -
Nebraska Supreme Court Advance Sheets
308 Nebraska Reports
WAYNE L. RYAN REVOCABLE TRUST v. RYAN
Cite as 308 Neb. 851of Streck’s profitability can take on and support a tremendous
amount of debt.
The district court found that Riddle credibly testified that
several aspects of the sales process limited the price offered
for Streck. Streck has not refuted Riddle’s testimony with a
witness of comparable experience and expertise. Therefore, we
conclude that the court did not err in giving weight to Riddle’s
testimony and in giving limited weight to the LOI’s.
Additionally, Streck in effect considered only financial buy-
ers. Project Blizzard included only one strategic buyer in the
diagnostic health care industry. No strategic buyers advanced
beyond the second round. In his report, Reilly raised the point
that there are active strategic buyers which could have acquired
Streck. Reilly provided an example transaction from 2016 in
which a strategic buyer acquired one of the GPTC compa-
nies for $1.11 billion. The acquired company’s 2015 EBITDA
was $44.5 million, as compared to Streck’s $63.8 million.
The record indicates the preferences of management affected
Streck’s value in the sales process.
(c) Lay Witness Testimony
Lay witnesses produced evidence indicating that the pros-
pects for a successful sale of Streck were bleak and that the
sales process was run in an adversarial manner. Carol testified
that once Connie became CEO, Dr. Ryan began to receive
incomplete financial information and then stopped receiving
any of Streck’s financial information. Additionally, Carol testi-
fied that throughout Project Blizzard, she and Dr. Ryan were
prohibited from attending sales meetings with prospective buy-
ers. Carol explained she needed the information Streck was
providing to the buyers. Carol testified, “I don’t know what
Streck is saying, what they’re offering. All I see is numbers
going down.” In response to Carol and Dr. Ryan’s request
to receive Streck’s financials, Connie and Gartlan stated that
Carol and Dr. Ryan would receive only the information pro-
vided under Nebraska law.
- 888 -
Nebraska Supreme Court Advance Sheets
308 Nebraska Reports
WAYNE L. RYAN REVOCABLE TRUST v. RYAN
Cite as 308 Neb. 851Uphoff, a long-time friend of the Ryan family, served on
Streck’s board and then resigned from the board once he
decided to participate in Project Blizzard as a prospective
buyer. Uphoff’s firm Capricorn advanced through rounds one
and two, but decided not to submit an LOI. Uphoff described
his experience in meeting with Streck’s management regarding
his first IOI. Uphoff found it odd that Dr. Ryan, the company’s
founder, scientist, and largest owner, was not present at the
meeting. Uphoff stated that typically the seller will want to
highlight that person. Noting Streck’s tempered financials,
Uphoff stated that overall there was not a lot of enthusiasm in
Streck’s presentation. Uphoff admitted this may have in part
been due to the deterioration of his relationship with Connie
after she became CEO.
Prior to Uphoff’s meeting with Streck’s management, Streck
sent written questions to Uphoff, which Uphoff stated were
atypical, not relevant to a potential sale, and “certainly insult-
ing.” One of Streck’s questions stated:
Barry Uphoff appears to continue to have ongoing commu-
nications with Carol Ryan, Wayne Ryan and Steven Ryan.
Please document all communication that has occurred
with any Ryan family member or Streck employee since
you submitted your offer letter. Please provide copies of
all emails sent to or from Barry Uphoff and any Ryan
family member or Streck employee since Jan[.] 13, 2014.
Please disclose any information related to other offers
for Streck shared with Barry Uphoff by Carol, Steve
or Wayne Ryan at the Creighton basketball game they
attended together on Jan[.] 17, 2014. Please provide a
summary of any phone calls exchanged between Barry
Uphoff and Dr. Ryan since Jan[.] 13, 2014.
There is evidence that Streck’s advancement of Capricorn
through the sales process may have been a pretense. Morgan
did not think Capricorn should advance to round two. Connie
agreed that “[Uphoff] will never be on our list” but stated
that “how best to manage is the question.” Connie advanced
Capricorn to round two in order to not “have a big moment
- 889 -
Nebraska Supreme Court Advance Sheets
308 Nebraska Reports
WAYNE L. RYAN REVOCABLE TRUST v. RYAN
Cite as 308 Neb. 851now.” Morgan speculated that Connie kept Uphoff in the proc­
ess in order to keep Dr. Ryan engaged. If Capricorn was not
a good fit from Streck’s perspective, then the sales process
could have benefited from including GTCR in round two rather
than Capricorn.
From Uphoff’s perspective as a potential buyer, he stated
Streck’s preference for less debt was atypical. As an analogy,
Uphoff stated, “if you’re selling a house, you really don’t care
where that money comes from, whether it’s out of someone’s
bank account or the bank they’re borrowing it from, you
just want that total dollar amount.” Uphoff found the reverse
breakup fee to be atypical. In explaining why he chose not
to submit an LOI, he stated that it was “death by a thousand
cuts.” Uphoff stated that if everything was added up, a poten-
tial buyer would begin to wonder whether Streck was “really
serious about transacting. . . . [I]s this just a waste of time try-
ing to get something done?” In this way, Uphoff’s testimony
echoed much of the substance of Riddle’s testimony.
We conclude that as a result of the dysfunctional nature of
Project Blizzard, evidence of which was established by wit-
ness testimony, the LOI’s are not entitled to significant weight
in valuing Streck, and we further conclude that the trial court
did not err in determining the LOI’s represented a floor as
to valuation.
3. Prejudgment Interest
The court awarded the RRT prejudgment interest pursuant
to § 21-20,166(5)(a), which states: “Interest may be allowed at
the rate specified in section 45-104, . . . but if the court finds
that the refusal of the petitioning shareholder to accept an
offer of payment was arbitrary or otherwise not in good faith,
no interest shall be allowed.” In doing so, the court found
no evidence that the RRT refused an offer of payment arbi-
trarily or not in good faith. The court determined the RRT was
entitled to interest on the fair value of its shares from January
19, 2015, the date of Streck’s election to purchase, through
August 12, 2019. The court applied the statutory interest rate
- 890 -
Nebraska Supreme Court Advance Sheets
308 Nebraska Reports
WAYNE L. RYAN REVOCABLE TRUST v. RYAN
Cite as 308 Neb. 851of 12 percent per annum set out in § 45-104 and awarded inter-
est in the amount of approximately $256 million.
Streck argues that the court erred in awarding prejudgment
interest, because the RRT did not comply with the requirements
of § 45-103.02(1). Section 45-103.02(1) provides:
Except as provided in section 45-103.04, interest as pro-
vided in section 45-103 shall accrue on the unpaid balance
of unliquidated claims from the date of the plaintiff’s first
offer of settlement which is exceeded by the judgment
until the entry of judgment if all of the following condi-
tions are met:
(a) The offer is made in writing upon the defendant by
certified mail, return receipt requested, to allow judgment
to be taken in accordance with the terms and conditions
stated in the offer;
(b) The offer is made not less than ten days prior to the
commencement of the trial;
(c) A copy of the offer and proof of delivery to the
defendant in the form of a receipt signed by the party or
his or her attorney is filed with the clerk of the court in
which the action is pending; and
(d) The offer is not accepted prior to trial or within
thirty days of the date of the offer, whichever occurs first.
[18] Streck contends that the RRT is not entitled to pre-
judgment interest, because the claim was unliquidated, the
RRT did not make a demand prior to trial, and the RRT did
not plead a request for prejudgment interest. Though Streck
is correct that the requirements of § 45-103.02 have not been
met, we disagree with Streck that an award of prejudgment
interest in this case is controlled by § 45-103.02(1). Statutory
language is to be given its plain and ordinary meaning, and
an appellate court will not resort to interpretation to ascertain
the meaning of statutory words which are plain, direct, and
unambiguous. 34
34
In re Application No. OP-0003, 303 Neb. 872, 932 N.W.2d 653 (2019).
- 891 -
Nebraska Supreme Court Advance Sheets
308 Nebraska Reports
WAYNE L. RYAN REVOCABLE TRUST v. RYAN
Cite as 308 Neb. 851Section 21-20,166(5)(a) is an independent statute authoriz-
ing the recovery of prejudgment interest. The sequence con-
templated by the plain and unambiguous terms of the statute
is that, under § 21-20,166(1), the corporation may elect or, if
the corporation fails to elect, one or more shareholders may
elect to purchase the petitioning shareholder’s shares at fair
value. Under § 21-20,166(3), if the parties reach an agree-
ment, the court shall enter an order directing the purchase of
the petitioner’s shares upon the terms and conditions agreed to
by the parties. If the parties are unable to reach an agreement,
then under § 21-20,166(4), the court shall determine the fair
value of the petitioner’s shares, and under § 21-20,166(5)(a),
the court shall enter an order directing the purchase upon such
terms and conditions as the court deems appropriate. Under
§ 21-20,166(5)(a), “[i]nterest may be allowed,” subject to one
exception that “if the court finds that the refusal of the petition-
ing shareholder to accept an offer of payment was arbitrary or
otherwise not in good faith, no interest shall be allowed.” The
word “may” when used in a statute will be given its ordinary,
permissive, and discretionary meaning unless it would mani-
festly defeat the statutory objective. 35 Section 21-20,166(5)(a)
means what it says. Under § 21-20,166(5)(a), the court is
authorized but is not required to award interest. But if the
court finds that the petitioning shareholder refused an offer
arbitrarily or otherwise not in good faith, the court is not
authorized to award interest.
Section 45-103.02(1) is inapplicable, because it contem-
plates different procedures and a different interest rate. Streck’s
argument that the RRT’s claim must be liquidated to recover
prejudgment interest is immaterial. 36 A claim is liquidated for
purposes of prejudgment interest when there is no reason-
able controversy as to both the amount due and the plaintiff’s
35
Brumbaugh v. Bendorf, 306 Neb. 250, 945 N.W.2d 116 (2020).
36
See, e.g., AVG Partners I, supra note 9; Weyh, supra note 9.
- 892 -
Nebraska Supreme Court Advance Sheets
308 Nebraska Reports
WAYNE L. RYAN REVOCABLE TRUST v. RYAN
Cite as 308 Neb. 851right to recover. 37 We agree with the RRT’s interpretation that
§ 21-20,166(5)(a) provides for an interest award despite the
fact that, under the procedures established by the Legislature
for a proceeding to purchase a petitioning shareholder’s shares,
the amount due is in controversy, making the petitioner’s claim
by definition unliquidated.
Nothing within § 21-20,166 requires the petitioning share-
holder to make a demand for payment before trial or include
a request for interest in its pleadings. Section 21-20,166(1) is
unique in that the proceedings are initiated by the purchas-
ing party’s filing of an election. Section 21-20,166 does not
require that the petitioning shareholder file a responsive plead-
ing. While notice of a request to recover prejudgment interest
is encouraged, compliance with Neb. Ct. R. Pldg. § 6-1108(a)
is not determinative where entitlement to interest is based on
statute and the adverse party had notice and an opportunity to
be heard prior to judgment. 38 It is clear that Streck had notice
of potential liability for prejudgment interest prior to electing
to purchase the RRT’s shares.
Having rejected Streck’s prejudgment interest arguments
based upon § 45-103.02(1), the only remaining issue that we
must determine is whether the RRT refused an offer of pay-
ment arbitrarily or otherwise not in good faith. We note that
Streck has not argued that interest should commence on a dif-
ferent date.
The only evidence of an offer made by Streck is its February
2015 offer of approximately $220 million, which included an
$80 million discount for lack of control and lack of market-
ability. Streck argues that the RRT should be precluded from
an interest award, because the RRT never responded to the
February 2015 offer and the RRT delayed the litigation by
challenging Streck’s election and would not agree to go for-
ward with trial during the pendency of Stacy’s appeal.
37
Brook Valley Ltd. Part. v. Mutual of Omaha Bank, 285 Neb. 157, 825
N.W.2d 779 (2013).
38
AVG Partners I, supra note 9.
- 893 -
Nebraska Supreme Court Advance Sheets
308 Nebraska Reports
WAYNE L. RYAN REVOCABLE TRUST v. RYAN
Cite as 308 Neb. 851We have not been presented with evidence that Streck made
a realistic offer; as such, we cannot conclude that the RRT’s
failure to accept an offer was arbitrary or not in good faith.
Allegedly vexatious litigation conduct is not relevant to an
award of prejudgment interest when the issue is good faith
rejection of an offer. 39 As such, Streck’s arguments are uncon-
vincing. This assignment of error is without merit.
4. Payment Order
Streck assigns that the district court erred in refusing to
allow Streck to make installment payments to satisfy the judg-
ment. Section 21-20,166(5)(a) states that “[u]pon determin-
ing the fair value of the shares, the court shall enter an order
directing the purchase upon such terms and conditions as the
court deems appropriate, which may include payment of the
purchase price in installments when necessary in the interest of
equity . . . .” The district court ordered Streck to purchase the
RRT’s shares within 10 days and overruled Streck’s request to
make installment payments.
Streck’s request was based on an affidavit from its CFO,
which stated that due to the size of the judgment, Streck would
be unable to obtain the necessary funds within 10 days. In
rejecting Streck’s request, the court found that Streck’s evi-
dence lacked credibility and was contrary to representations
Streck previously made to the court, as well as assurances
made by Streck in the SLC report that it would be able to
pay the purchase price. The court found that Streck had an
extended period to plan for the payment and that Streck had
come to the court with unclean hands.
For purposes of disposing of Streck’s assignment of error
regarding the court’s payment order, we need not decide
whether Streck’s representations to the trial court rose to the
level of unclean hands. Suffice it to say that the trial court was
not swayed by Streck’s stated need for installment payments.
39
See, e.g., Matter of Carolina Gardens v. Menowitz, 238 A.D.2d 189, 655
N.Y.S.2d 536 (1997).
- 894 -
Nebraska Supreme Court Advance Sheets
308 Nebraska Reports
WAYNE L. RYAN REVOCABLE TRUST v. RYAN
Cite as 308 Neb. 851The South Dakota Supreme Court interpreted a statute simi-
lar to § 21-20,166(5)(a) and determined that the language per-
mits a trial court discretion in requiring a lump-sum payment or
installment payments. 40 The South Dakota court then employed
an abuse of discretion standard of review to determine whether
the trial court erred in ordering installment payments. 41
Here, the trial court found that Streck’s request was not in
the interests of equity. The court, having conducted the bench
trial and presided over the case for an extended period of time,
was in the best position to determine the appropriate terms and
condition of payment. We give significant weight to the court’s
credibility determination. 42 Nothing within our record supports
Streck’s contention that the trial court abused its discretion
in ordering a lump-sum payment. This assignment of error is
without merit.
V. CONCLUSION
For the foregoing reasons, we affirm the judgment of the
district court.
Affirmed.
Miller-Lerman and Stacy, JJ., not participating.
40
Link v. L.S.I., Inc., 793 N.W.2d 44 (S.D. 2010).
41
Id.42
See Anderson, supra note 5.