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expert testimony in making our finding as to the value of the
shares. We found Spiro to be convincing, and we agree with his
valuation, as corrected by respondent, as to the value of the
shares. We had difficulty with Klemm’s valuation, and we will
set forth some of our more significant concerns. We accorded
Klemm’s valuation no weight.
IV. Klemm’s Testimony
A. Approaches to Valuation
Klemm followed three approaches in valuing the shares:
Capitalization of earnings, capitalization of revenues, and
return on equity. His aim was to find the price that the market
would set for a share of the common stock of the corporation on
October 22, 1989. Under each approach, such a market price was
the unknown to be discovered. Under each approach, that unknown
was a function of two variables, one particular to the
corporation (e.g., earnings) and one reflective of the market
(i.e., a variable characteristic of publicly traded companies
comparable to the corporation). Our first major concern is with
Klemm’s identification of variables characteristic of publicly
traded companies comparable to the corporation. Simply put,
petitioner has failed to persuade us that Klemm identified
companies comparable to the corporation and used data with
respect to those companies to derive the appropriate market-
reflective variables. In our findings of fact, we pointed out
the discrepancy between Klemm’s earlier report and his expert
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