Judge Won't Let Medical Company Sell Itself Short

A big problem in economic life is that mostly you want the things you own to be worth as much as possible, but sometimes you don't. You want them to be worth a lot if you're going to sell them, or report on them to the investors for whom you manage them, or generally sit around and gloat about how rich you are. You don't want them to be worth a lot, mainly, if you are going to pay taxes on them, though there are other important cases.1438191663159 It can be tempting just to say that they're worth different amounts in different situations: Tell the buyer of your thing that it's worth $100, but tell the IRS that it's only worth $20. But, you know. Sometimes they check!

Here is a story from Tuesday's delightful opinion in Fox v. CDX Holdings by Delaware Vice Chancellor J. Travis Laster. There once was a company called Caris Life Sciences. Caris was a private company mostly owned by its founder David Halbert (70.4 percent) and by a private equity fund called JH Whitney VI LP (26.7 percent), with employee stock options making up most of the other 2.9 percent. Caris had three businesses: Caris Diagnostics, which was profitable; TargetNow, which wasn't yet; and Carisome, a blood-test cancer-screening business that "was in the developmental stage": It had launched two unsuccessful products, but "a successful Carisome product 'would be the largest product launch in the history of mankind,'" if Halbert did say so himself. (He did, in court.)