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Valuation in Cannabis M&A, With Thoughts on Restructuring


This panel will address strategies for handling valuation disputes and other post-closing adjustments arising from cannabis M&A, looking at before-the-fact transactional considerations and after-the-fact litigation solutions.  We will also consider the availability of state-law restructuring and turnaround remedies given the absence of federal bankruptcy protection for cannabis companies; it’s a hybrid event.

Steven Hecht, Partner, Rolnick Kramer Sadighi LLP

Steve is an original partner of the firm specializing in business valuation disputes, fiduciary duty claims and shareholder rights.  He has brought and defended securities claims for nearly 30 years.  Consistent with the firm’s mission statement, Steve believes that the greatest value proposition is to partner with his clients in pursuing value-maximizing litigation opportunities.

Steve is a go-to trial lawyer for hedge funds, institutional investors, family offices, university endowments, venture funds and other investors interested in utilizing the legal process to create value for their own investors. Whether by activist litigation, fiduciary duty claims, or appraisal and other valuation strategies, Steve has extensive experience across the gamut of options for shareholders.  He regularly tries cases in Delaware Chancery Court and around the country for clients seeking outsized returns.

Among Steve’s significant trial experience:

  • Led five-day trial in Delaware Chancery Court on behalf of hedge fund claiming acquisition of controlled company by controller was undervalued;
  • Led seven-day trial in Delaware Chancery Court representing consortium of hedge funds with $500mm in valuation claims; established rule that appraisal prepayments are not subject to disgorgement;
  • Led four-day trial in Delaware Chancery Court on behalf of hedge funds seeking compensation for the increase in target’s value between the signing of the merger and the closing, ultimately taking that issue to the Delaware Supreme Court;  
  • Among team leading three-day trial in Delaware Chancery Court regarding private equity acquisition of health care provider;
  • Led two-week trial for hedge fund’s portfolio company suing competitor for employee piracy and wrongful competition, taking issue concerning jury right to Maryland Supreme Court;
  • Led three-day trial in Delaware Chancery Court regarding value of American Idol asset (held by same company owning the likeness and image of Elvis Pressley and Muhammad Ali);
  • Co-led two-week jury trial in Fairfax County Court defending public tech company from $120mm claim and winning directed verdict against plaintiff even before putting on the defense case;
  • Led multiple successful arbitrations with JAMS, AAA, FINRA and other tribunals on contract, suitability, and commercial tort claims, representing hedge fund founders, private placement agents and broker-dealers;
  • Led three-day jury trial in EDNY federal court defending against national sign company, winning jury verdict rejecting plaintiff’s claim and granting counterclaim for breach of implied covenant (jury verdict was rendered in under 90 minutes); successfully defended appeal in Second Circuit; 
  • Led week-long jury trial in SDNY federal court concerning broker-dealer termination, winning jury verdict for defendant broker-dealer (in under one hour of jury deliberation);
  • Led two-day trial in SDNY Bankruptcy Court involving international dispute over bankruptcy discharge; and
  • Led four-week trial in NJ state court successfully defending against fraudulent conveyance claim after Supreme Court remand. 

As the co-creator of RKS’s Valuation Litigation and Shareholder Rights Blog, an online forum providing extensive coverage of issues surrounding shareholders’ active use of their rights to increase value, including by valuation litigation.  Steve has become widely known for his insights on underutilized but highly effective shareholder tools.

Within the business valuation space, Steve’s practice has expanded to include focus on the growing cannabis sector, where he is handling cannabis valuation cases both within and outside Delaware.

Steve's work also includes representing investment funds in opt-out and direct litigation in securities fraud cases; he represents clients before the SEC and FINRA, and he is a member of FINRA's Board of Arbitrators.

Representative Matters:

  • Pioneered shareholder litigation arbitrage strategy involving public company stockholder claims against underpriced mergers. 
  • Successfully represented wholesale liquor distributor in 2020 federal litigation over valuation of clawback right
  • Argued in Delaware Supreme Court for recognition of appraisal award to reflect accretion in value between M&A transaction’s signing and closing.  Watch the July 2020 argument here
  • Secured multi-million dollar recoveries for investors in several recent cases, including against Marrone Bio and its advisors.
  • Defended client's constitutional right to a jury before Maryland's highest court. Watch the argument here.
  • Litigated numerous valuation disputes to trial, trying such issues as discounted cash flow (DCF) inputs, adjustments to projections, synergies, weighted average cost of capital (WACC) disputes, perpetuity growth rate assumptions, discounts for lack of marketability (DLOM) and for lack of control (DLOC), and size premiums. 
  • Represented investors with over $2 billion at stake in business valuation disputes in the last five years. 
  • Won major issue of Delaware law that appraisal prepayments are not subject to clawback.
Sarah Dalton, Senior Director, Consumer Markets | Americas Cannabis Centre of Excellence, Ernst & Young LLP

Big picture perspective can spark even greater innovation. As Co-Lead of EY Americas Cannabis Centre of Excellence and US cannabis sector leader, Sarah works closely with senior executives to understand the landscape, and then maximize value creation through corporate strategy, innovation, M&A, and performance enhancement.

Sarah supports corporate and private equity clients in evaluating M&A opportunities; conducting sell-side and buy-side market studies; and identifying innovative new products and ingredients. She draws on years of experience working with state cannabis regulators across the United States to draft medical and adult-use rules; review dispensary license applications; conduct risk and control assessments; and evaluate investigation and audit procedures. Prior to her current focus on the cannabis industry, Sarah was a forensic accountant, assisting clients in various industries to arbitrate M&A working capital and earnout disputes; assess compliance and forensic risks; develop ethics and compliance programs; and design internal controls.

A graduate of Loyola University New Orleans, Sarah holds a Bachelor’s degree in accounting, as well as a Master’s of Business Administration. 

Sander Zagzebski, Member | Senior Director, Clark Hill Public Strategies, Clark Hill PLC

Sander C. Zagzebski is a corporate, securities, M&A, and private equity lawyer representing strategic and financial investors, buyers and sellers in public and private transactions. He also advises corporate boards, independent committees, and other corporate stakeholders on corporate governance, takeover planning and defense, and securities matters.

Sander’s experience includes joint ventures and strategic alliances; capital raising transactions (public and private offerings of debt and equity securities, including private equity investments and venture capital investments); out-of-court restructurings, workouts, and recapitalizations; structured finance transactions; private equity and venture capital fund formation and governance; and general corporate, partnership and LLC matters.

Sander has extensive experience representing emerging growth and technology companies (including software, fintech, and biotech companies), entertainment and new media companies, investment advisors, aerospace and defense companies, bank holding companies, manufacturing companies, real estate companies, health and wellness companies, and consumer product companies in M&A, capital raising, and other strategic corporate transactions ranging in size from under $10M to in excess of $1B.  Sander also has considerable experience representing clients in the emerging legal cannabis industry and is co-chair of the firm’s Cannabis Industry Group.


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