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preferred, and 6-percent preferred stock was $965, $40, and
$54.55, respectively.
Because he could find no acceptable comparable companies,
Sherman did not analyze the values of comparable companies in
determining the value of decedent’s shares. Sherman gave little
or no weight to the 1988 sale. Also, respondent instructed
Sherman not to consider the 1987 redemption agreement. Moreover,
Sherman did not: (1) Make a site inspection of the company’s
premises, (2) interview the management of the company, (3) secure
information about the company from potential outside sources such
as suppliers, customers, competitors, or financial institutions,
or (4) obtain information about the company’s competitors.
Finally, the only information that Sherman had on the industry in
which the company did business consisted of retail sales data
that was provided by a trade association.
The Company and the Horticultural Industry
The Company. In January 1991, the company was not operated
in the most profitable manner: In order to maintain its sales
levels, the company relied to a significant extent on many slow-
paying customers. The company used antiquated methods for
processing and tracking orders and accounts. Many of the
company’s operations were not computerized, and sales orders were
recorded manually.
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Last modified: May 25, 2011