Valuation of Denied Rights

Edgeworth Partner Dr. Jesse David provided expert analysis, valuing the right of first refusal. A commercial landlord sold a property to a third-party without notifying the tenant to whom the landlord had promised the right to first refuse such a sale. The tenant sued for damages, claiming their amount to be equal to the market value of the property. The landlord concluded the value of the right was zero. Offering a third opinion, Dr. David’s analysis:

• Constructed a bidding model in which each potential buyer had their own value of the property and a distribution of assumptions about other potential bidders
• Performed a valuation of the right of first refusal based on this bidding model

The parties reached a settlement based on Dr. David’s valuation analysis.