The number is $723 million dollars. Of that, $467 million for 52% of the company and $256 million in prejudgment interest. It involved the valuation of the private (and “S” corporation) Streck, Inc. Streck was founded in 1971 by Dr. Wayne L. Ryan. Dr. Ryan earned two degrees from Creighton University. He was a brilliant scientist and pioneer in the hematology field. He built a business that had sales of $102 million in 2014, adjusted EBITDA of $54 million and a gross profit of 77%. These are outstanding numbers.
Every lawsuit has a legal and personal aspect to it. In this case, the personal aspect is way more interesting than the legal issues. In fact, the legal issues are very much garden variety and not at all interesting.
Dr. Ryan’s daughter Connie worked for Streck. After Dr. Ryan’s wife Eileen died in 2013, Connie had the majority of voting shares. She installed herself as CEO. Connie agreed to sell the company, but it is clear to me from the opinion (and also to the trial judge) that the sale process was not genuine as she sabotaged it in a number of ways which I won’t discuss here.
Bids were solicited to buy the company. One bidder was Warren Buffett. His name isn’t mentioned in the appellate opinion but was disclosed in the trial court decision. Mr. Buffett offered $330 million for Streck. Per Warren’s usual practice, he surely would have kept Connie as CEO as long as it made money.
Other bidders emerged from the sale process and the top bid was $675 million; more than double Buffett’s. But Dr. Ryan and his daughter Carol who was trustee for her mother’s trust were unhappy. At a July 2014 board meeting, the founder of the company stated that while he owned 92% of the stock and daughter Connie only owned 8%, he had no input into the bidders and bidding process.
Dr. Ryan’s shares were owned by his revocable trust. Obviously, he didn’t want his estate to pass through probate court. This was prudent on his part. The trustee of his revocable trust sued Streck for shareholder oppression per Neb. Rev. Stat. Section 21-20,162 and breach of fiduciary duty. The trial court then had to value the trust’s shares of Streck, Inc.
Expert witnesses testified for both sides. They were both extremely well qualified and certainly well paid. Streck’s expert said the entire company was worth $581 million while Dr. Ryan’s expert said it was worth $893 million; a difference of $163 million. Sarpy county district court judge Nathan Cox found Dr. Ryan’s expert to be more credible. He didn’t split the difference. That decision was correctly affirmed by the Nebraska Supreme Court.
My main point is that the value of any property – a business, real estate, car, art, securities – is purely an opinion. Experts can render opinions. Experts can be wrong. A finder of fact (a judge or jury) decides which expert is more credible under the circumstances and renders a final judgment. If there is a sale on the open market that usually is the conclusive value. But absent a sale, a court has to figure out what the value is.
Dr. Wayne Ryan died in 2017. But the money value of his life’s work was validated by Nebraska courts. His daughter Connie, on the other hand, tried to chisel her dad out of $163 million over the course of seven years. But what was the real price?
Streck had asked the trial court to allow it to pay the judgment over time. Judge Cox rejected that. So, absent an attempt to have the U.S. Supreme Court hear the case (a total non-starter), Streck is going to have to pay $723 million in about sixty days. But frankly it will not be a problem given the profitability of this company. It has had years to become even more valuable. It has cash on hand and can borrow money. It can also seek equity partners who would just own a minority stake. The company could also go public at some point. With the SPAC craze, Streck could go public very quickly. But Connie Ryan will remain CEO and, to my mind, that’s what she wanted the entire time. If the company would have been sold back in 2014, she probably would have been replaced and her CEO salary would have disappeared. If the company would have been sold back in 2014-15, she would have received the gross amount of about $54 million for her 8%. Who knows how much she has been paid as CEO since 2013 and she still owns her shares.
Wayne and Eileen Ryan had five children. I’m guessing that family relations between the siblings have been strained. I note that Wayne and Eileen Ryan were very generous to Omaha institutions, including Creighton University. The Creighton women’s volleyball and basketball facility is named for them.
Finally, I think it is worth noting that both the trial court and Supreme Court wrote very thorough and legally sound opinions.
Source: Wayne L. Ryan Revocable Trust v. Ryan, 308 Neb. 851 (April 9, 2021).