- 12 - lack-of-marketability discount6 (35-percent combined discount) to that mean value and arrived at an amount, viz., $604,777, that he determined was the fair market value on the valuation date of decedent's 50-percent stock interest in B&W Longview. We are not persuaded on the record presented to us that the 35-percent combined discount which Mr. Bernstein applied is appropriate. When he prepared his expert report, Mr. Harrell, like Mr. Bernstein, believed that applying a weighted combination of the market multiple method and the transaction method generally would produce an accurate estimate under the market approach of the fair market value on the valuation date of the stock interest in question.7 However, after he prepared his report and before trial, Mr. Harrell discovered deficiencies in the data which were provided to him and on which he relied in applying the market multiple method. Those deficiencies caused Mr. Harrell to conclude that the results that he reached under that method are not reliable. We agree, and we shall not give any weight to 6 Mr. Bernstein described the 35-percent discount that he ap- plied as a lack-of-marketability discount. However, his explana- tion in his expert report of what that discount was intended to cover makes it clear, and petitioner agrees on brief, that that discount was applied by Mr. Bernstein not only because he be- lieved that there was a lack of marketability inherent in the stock interest in question, but also because he concluded that that stock interest was a noncontrolling interest. 7 Unlike Mr. Bernstein who gave equal weight to those two meth- ods, Mr. Harrell believed when he prepared his expert report that one-third weight should be given to the market multiple method and two-thirds weight should be given to the transaction method.Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 Next
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