Following the breakup of the relationship formed by the parties, it was agreed that Mister will buy back the share of Madam she holds in the aviation business they hold in common. It is now necessary to determine the fair market value (FMV) thereof, that is to say, that a well-informed third party would be willing to pay for the acquisition of this business without constraint.
The role of the tribunal is not to restore a balance between the shareholders: the mandate entrusted to it by the parties is to determine the value of the corporation, regardless of an "oppression remedy" situation. It is therefore appropriate to retain an expertise that takes into account a "key employee discount", which takes into account the fact that a potential buyer would reduce the price he would be willing to offer if he feared that Mister may leave the corporation. Indeed, Mister is a key employee. He holds a key position within the corporation and no one is able to replace him at short notice unless he is given one-year training. The business continuity would be compromised in the event of his departure. Thus, a 30% discount is applied to the capitalized value of the corporation's reported net income, which is $4.2 million to $4.6 million. As for the capitalization rate used, it is 3.75 to 4, given the risky nature of the corporation's activities, the demanding regulatory environment in which it operates, the corporation's economic dependence to its sole client (ATAC), the uncertainty surrounding the number of hours flown by the corporation's aircraft, and the risk associated with the continuing business relationship between ATAC and the US Navy.
The corporation's FMV is therefore set at $22.2 million. There is no need to update Fortin's calculations in 2016. It is true that revenues may have increased in 2015 and 2016, but spending has surely also been doing the same. In addition, Madam received dividends of more than $1 million for each of these years.
Mister will have to pay the amount of $ 11.1 million. Since neither the corporation nor Mister has the cash to pay this amount, the corporation will borrow $1.1M. $5 million will come from the disposal of the corporation's assets, while the balance will be paid out from the amounts it receives for the hours of flight performed on behalf of ATAC.