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testimony with respect to the identification of comparable
companies. Except perhaps for one company, no comparable
companies are identified in his expert testimony. During his
oral testimony, Klemm tried to explain that discrepancy; he also
asked that his expert testimony be amended to make his earlier
identification of comparable companies part of that testimony.
We cannot reconcile his explanation of why he took the
comparables out (which we do not fully comprehend) with his
request to amend his expert testimony and add them back in. We
have little confidence in his quantification of appropriate
variables reflective of the market (e.g., capitalization rates).
Klemm’s oral testimony has raised for us serious doubts as to his
understanding of the approaches to valuation that he selected.
That, alone, is sufficient reason for us to reject the
conclusions resulting from those approaches.
We are also concerned that in relying on his three
approaches Klemm ignored the dynamic state of the corporation,
which had experienced exceptional growth in both revenues and
earnings since its inception. We can find in neither Klemm’s
identification of (1) market variables or (2) variables
particular to the corporation (e.g., earnings) nor in his
manipulation of those variables any recognition that future
earnings and revenues might be any different than they were in
1989 (i.e., that earnings and revenues would continue to grow).
Although, in the body of his report, Klemm takes note of the
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