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reflected adequate and full consideration in money or money’s
worth as of the date of execution of the agreement.
V. Fair Market Value of Decedent’s Shares
Disregarding the 1987 redemption agreement, we must
determine the fair market value of decedent’s shares on the
alternative valuation date. We discount much of Simone’s
testimony for reasons similar to those previously stated.
Respondent has conceded that the value of decedent’s shares is no
greater than $4,580,000. We accept that concession and also find
Sherman’s opinion to be helpful in determining the fair market
value of decedent’s shares.
We do not, however, completely agree with Sherman because we
find some weaknesses in his analysis of the value of decedent’s
shares. First, Sherman did not make an on-site inspection of the
company or interview the company’s management. Second, he could
find no comparable companies on which to base his valuation.
Third, we believe that Sherman did not adequately consider the
effect of competition on the company’s value. The company sold
in the wholesale market. The company was in a poor competitive
position vis-a-vis its domestic competitors, some of which were
vertically integrated. In addition, Sherman did not adequately
analyze the impact of international competition on the company’s
value. In analyzing the conditions in the horticultural
industry, Sherman only analyzed retail sales figures. Sherman,
however, made no effort to determine the extent to which the
growth in the horticultural industry’s retail sales was
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