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it an amount to reflect the future value of the corporation at
the end of 5 years. He then divided that result by the number of
shares that were outstanding on the appropriate valuation date to
derive a value for each such share. The value he so derived was
$5.65. Because shares of the corporation were not readily
marketable on that date, he then applied a liquidity discount to
yield a final estimate of value. Although he recognized that a
35-percent liquidity discount had come to be regarded as an
average discount, he applied a discount of only 10 percent. He
did so because he thought that an initial public offering of
shares of the corporation was likely, based on (1) the ownership
of a substantial portion of the corporation by venture
capitalists, (2) the recent history of public offerings by
similar companies, and (3) his assumption that decedent would
have been aware of (and would have communicated to any potential
buyer) steps towards a public offering that already had been
taken by the corporation. Spiro thus computed a per-share fair
market value for the shares of $5.09 using the income approach.
Under the market approach, Spiro first made a list of public
companies that he considered comparable to the corporation. He
then identified those on the list that resembled the corporation
sufficiently closely in terms of both earnings per share and
growth in earnings per share. For those three companies, he used
certain market value indicators (e.g., the ratio of price to
recent earnings) to derive a range of market values for shares of
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