Appraisal Right

What is an 'Appraisal Right'

An appraisal right is the statutory right of a corporation's minority shareholders to have a fair stock price be determined by a judicial proceeding or independent valuator, and the obligation for the acquiring corporation to repurchase shares at that price. An appraisal right is a protection policy for shareholders, preventing corporations involved in a merger from paying less than the company is worth to the shareholders.

BREAKING DOWN 'Appraisal Right'

Multiple valuation methods are often used in determining the fair stock price and value of the acquired company, including asset-based methods, income or cash flow methods, comparable market data models, and hybrid or formula methods. While most occurrences of appraisal rights are based on consolidation or mergers, it may also apply to instances when the corporation takes any extraordinary action that shareholders deem harmful to their interests. In mergers and acquisitions, appraisal rights guarantee that shareholders are adequately compensated for being overridden in a merger or acquisition.

RELATED TERMS
  1. Qualified Appraiser

    An individual who has earned an appraisal designation from a ...
  2. Appraisal Approach

    A procedure for determining an asset's value. The appraisal approach ...
  3. Appraisal

    A valuation of property (ie. real estate, a business, an antique) ...
  4. Appraised Value

    An evaluation of a property's value based on a given point in ...
  5. Appraisal Management Company - ...

    An independent entity through which mortgage lenders order residential ...
  6. Appraisal Fraud

    A form of mortgage fraud, whereby the value of a home is deliberately ...
Related Articles
  1. Personal Finance

    What You Should Know About Home Appraisals

    Home appraisals are an unbiased way to determine a home's value. Here is what you need to know about obtaining one.
  2. Home & Auto

    The Home Appraisal: Your Key to a Successful Refinance

    When you refinance your mortgage, everything hinges on the appraisal. Here's what appraisers look at, how to make your home look as valuable as possible and ways to fight back if the valuation ...
  3. Home & Auto

    6 Ways Homeowners Can Dispute an Absurdly Low Appraisal

    Count it as one of the most frustrating and disappointing of all real estate quandaries.
  4. Home & Auto

    7 Ways To Increase Your Home's Appraisal Value

    When it's time to sell your home – or refinance it – it will need to be appraised. Here's how to make sure the valuation is as high as possible.
  5. Home & Auto

    The Home Appraisal: Key To A Successful Refinance

    An appraisal is a professional’s assessment of a home’s value that ensures banks don’t lend more money than a property is worth.
  6. Home & Auto

    What You Should Know About Home Appraisals

    The home appraisal is a key part of any loan-closing checklist. It’s an unbiased professional opinion of a home’s value.
  7. Personal Finance

    Your Heirloom Jewelry: How Much Is It Worth?

    You grandma's diamonds are now yours. Whether you plan to keep them or not, you first need an honest appraisal. Here's how to get one.
  8. Investing Basics

    Knowing Your Rights As A Shareholder

    We delve into common stock owners' privileges and how to be vigilant in monitoring a company.
  9. Professionals

    Appraisals and Substantiation Requirements

    Appraisals and Substantiation Requirements
  10. Investing Basics

    Who is a Shareholder?

    A shareholder is a person, company or other entity that owns at least one share of a company’s stock.
RELATED FAQS
  1. How does a merger affect the shareholders?

    Explore the effect of a merger and understand how the process affects shareholders of the newly merged firm in terms of stock ... Read Answer >>
  2. What rights do all common shareholders have?

    Learn what rights all common shareholders have, and understand the remedies that can be taken if those rights are violated ... Read Answer >>
  3. What is a stock-for-stock merger and how does this corporate action affect existing ...

    First, let's be clear about what we mean by a stock-for-stock merger. When a merger or acquisition is conducted, there are ... Read Answer >>
  4. How is market value determined in the real estate market?

    Learn how fair market value is determined during a real estate appraisal and how market values are really decided by professional ... Read Answer >>
  5. What is the difference between a merger and a takeover?

    In a general sense, mergers and takeovers (or acquisitions) are very similar corporate actions - they combine two previously ... Read Answer >>
  6. How long does it take for a merger to go through?

    Corporate mergers and acquisitions can vary considerably in the time they take to be completed. There are a number of individual ... Read Answer >>
Hot Definitions
  1. Return On Invested Capital - ROIC

    A calculation used to assess a company's efficiency at allocating the capital under its control to profitable investments. ...
  2. Law Of Demand

    A microeconomic law that states that, all other factors being equal, as the price of a good or service increases, consumer ...
  3. Cost Of Debt

    The effective rate that a company pays on its current debt. This can be measured in either before- or after-tax returns; ...
  4. Yield Curve

    A line that plots the interest rates, at a set point in time, of bonds having equal credit quality, but differing maturity ...
  5. Stop-Limit Order

    An order placed with a broker that combines the features of stop order with those of a limit order. A stop-limit order will ...
  6. Keynesian Economics

    An economic theory of total spending in the economy and its effects on output and inflation. Keynesian economics was developed ...
Trading Center