Chapter 9 - THE RESORT'S REAL VALUE
Priya Shah performed an independent valuation.
Not Northstar’s number.
Not Ryan’s book value.
She examined:
cash flow,
land value,
debt,
capital needs,
seasonality,
brand value,
and development potential.
Result:
enterprise value range:
$25 million to $29 million.
After debt and transaction costs, Claire’s 44% economic value:
approximately $6.1 million to $7.2 million.
Not guaranteed.
Not instantly liquid.
Priya’s valuation report also included a downside case.
If Northstar walked away and the resort remained independent, major repairs could reduce distributions for three years.
Claire’s 44% interest might be worth closer to:
$4.8 million to $5.4 million
under a conservative minority-value approach.
Still above the old exit formula.
But not dramatically above if the resort deteriorated.
Madison seized on that.
“You act like two-point-one was robbery. What if the place has two bad winters?”
Claire answered:
“Then I take that risk because they are my shares.”
Madison stopped.
That was another form of control they had ignored.
Ownership included downside.
Not just upside.
By buying Claire out cheaply, Madison would have taken risk.
But she also would have taken Claire’s right to choose that risk.
The dispute was not simply price.
It was who had the right to decide whether uncertainty was worth holding.
Still far above $2.1 million.
Ryan attacked the report.
He argued the resort needed:
major sewer work,
fire-code upgrades,
staff housing repairs,
and marina dredging.
Priya agreed.
They were included.
He argued Northstar’s development value was irrelevant if Claire wanted to preserve the existing resort.
Priya agreed again.
Then she said:
“But you cannot use preservation goals to justify paying a shareholder an artificially low exit price while privately knowing strategic buyers value the property far higher.”
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Ryan had no clean answer.
Because that was exactly what he had tried to do.
