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a study prepared by Melanie Earles and Edward Miliam which
asserted that marketability discounts allowed by the Court over
the past 36 years averaged 24 percent.
Before arriving at his conclusion, Mr. Schneider remarked
that he believed that “a bank would be a highly marketable
business and that the stock would be highly marketable.” He also
noted in his report that the Company did not have a sole
shareholder owning more than 50 percent of the Company. At
trial, Mr. Schneider testified that the Company was marketable
because the Bank had strong profitability. Evaluating these
characteristics in conjunction with marketability discounts
arrived at in the studies discussed by Shannon Pratt and allowed
by this Court in its prior opinions, Mr. Schneider concluded that
a 20-percent discount for lack of marketability was appropriate.
As for Mr. Schneider’s report, we believe that he merely
made a subjective judgment as to the marketability discount
without considering appropriate comparisons. Mr. Schneider
looked at only generalized studies which did not differentiate
marketability discounts for particular industries. Further,
although he stated that each case should be evaluated in terms of
its own facts and circumstances, Mr. Schneider seems to rely on
opinions by this Court that describe different factual scenarios
from the instant cases and generalized statistics regarding
marketability discounts previously allowed by the Court.
Finally, Mr. Schneider has failed to fully explain why he
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Last modified: May 25, 2011