Covisint Headquarters Location Study: Oakland County, Michigan
Sales and Financial Analysis for Expert Report
Alcoholic Beverage Distiller and Importer
One of the nation’s leading distillers and importers of wine and liquor, with operations across the United States, retained Anderson Economic Group when a dispute arose with a former distributor in the State of Missouri. At issue was whether the distributor’s rights under franchise law were infringed on when its contract was terminated.
Anderson Economic Group used it extensive background in market analysis and franchised retailing, along with its knowledge of the three-tiered distribution system of alcoholic beverages in the United States, to prepare an expert report for use in litigation in US District Court. The report addressed the economic basis of a franchise agreement; the common-law understanding of the rights and obligations of each party; and whether the distiller and importer had properly terminated its franchised distributor. Using advanced economic and financial techniques and a sophisticated graphical and mathematic analysis of the available sales data, we were able to provide a report showing the relevant basis for termination, based on both legal and performance grounds.
Subsequent to the provision of the report, our client was offered favorable terms for a settlement.
Valuation of Beer Distributors
North American Beer Importer
Anderson Economic Group was retained by a beer importer to estimate the fair market values of several distributors of their product in the New York City area. By “fair market value,” we mean the price a willing buyer would pay to a willing seller, both possessing adequate information, for the economic value of the line of business. The valuation was done using the best available information, and well-accepted methods of estimating the economic value of a firm. However, certain unique characteristics of the market affected the value of each distributor, and adjustments were made for discounts and for premium factors of marketability, barriers to entry, scale, uniqueness of distribution system in the state, per-capita consumption and other market patterns, “bottle law” factors, and dominance of brands.
We produced a report with sections for each distributor, for use by the importer in improving its distribution network and in negotiations with its distributors.
The State of Wisconsin, as part of an effort to ensure economic growth, retained Anderson Economic Group to research the business climate through a survey of business leaders, and to prepare a report on the survey results and strategy recommendations.
AEG worked with Mitchell Research & Communications, an East Lansing, Michigan market research firm, to develop and implement a research strategy to collect qualitative and quantitative data. This included surveying nearly 400 business leaders, and collecting demographic, market, policy, and business operation data. The data was then analyzed, and strategies formulated to help the State maintain and attract employers.
The final report was presented to state policymakers, including Governor McCallum, for use in the development of a statewide plan.
Property Tax Analysis
Federal and State Non-Profit Regulatory Advice
PG&E Generating – Michigan
PG&E Generating is a national energy provider that owns and operates merchant generating plants across the country.
Anderson Economic Group assisted PG&E by conducting an economic assessment of a proposed development site. The assessment was used by PG&E, as well as the local community, to secure a tax free Renaissance Zone designation for the site. Furthermore, we provided a sophisticated analysis of the likely property tax burden on the $500 million project. We created a simulation model to project tax burdens under various scenarios, and identified specific strategies to minimize tax costs. We also identified tax levies that were outside legal limits.
Finally, we assisted PG&E in identifying the proper structure for a $1 million contribution to aid the citizens of the local area, given state and federal laws regarding tax-exempt organizations, and eligibility for state tax credits.
Our client was one of the United States leading engineering and manufacturing companies, specialized in water and wastewater treatment and industrial processes, defense electronics and services, electronic components such as connectors and switches, and a wide range of other industrial products.
When our client sold a subsidiary that provided components to automotive manufacturers, the State of Michigan charged the firm with a very large Single Business Tax (“SBT”) liability. The SBT is a value-added tax (VAT), unique within the United States, though common in Europe and Canada. For a suit filed against the State of Michigan, we prepared a report and affidavit which described how the application of the tax in this manner would violate the Commerce Clause of the United States Constitution. For the report, we:
-Reviewed value-added taxation in general
-Reviewed Michigan’s SBT in particular
-Reviewed the past interstate commerce cases relating to taxation and state actions violating interstate commerce
-Summarized the structure of the auto industry
-Analyzed how the application of the Michigan SBT in this matter infringed interstate commerce, was contrary to the purpose of the SBT, and resulted in perverse tax treatment of this company and, potentially, many others.
Before the report was presented in court, the State made an acceptable settlement with our client, based partially on the record established by our report.
Market and Good Cause Analysis
Mercedes-Benz Dealership – Chicago Area
The attorneys for a franchised dealer of Mercedes-Benz USA operating in the Greater Chicago Area retained Anderson Economic Group after Mercedes-Benz USA appointed a new dealer within the “Area of Influence” of their client. Anderson Economic Group was tasked with evaluating the effects of the new dealer on the current dealer’s operations, and analyzing the market before and after the introduction of another dealership.
We completed an expert report that began with an evaluation of the fundamental rationale of the franchise relationship and the responsibilities of both parties. The report continued with a detailed analysis of sales data, the pattern of sales as distance from the retail outlet increases, the geographic and demographic characteristics of the changed market areas, the concentration of Mercedes-Benz dealers in other cities, and the likely effect of the new dealer on the sales of the existing dealer.
The analysis concluded that there was not “good cause” under the Illinois Statute for the appointment of a new dealer in the area. Our report rebutted contrary reports submitted by USAI and Price Waterhouse Coopers, and also commented on a report submitted by RL Polk.
After submission of the report, Patrick Anderson was deposed on its contents. Mercedes-Benz later settled the case by allowing the Plaintiff to sell the dealership to a new owner that would be given a chance to relocate, and also allowing the Plaintiff to open a new dealership in a more favorable market.
Patrick L. Anderson, Christopher S. Cotton, Christine A. LeNet
Consumer Impact of Set Prices for Local Phone Service