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We reject Mr. Chaffe’s opinion. He is unhelpful to us in
resolving the issues herein. We were unimpressed by his
testimony during trial, and we are unpersuaded by the conclusions
reached in his expert report. Mr. Chaffe was unable to answer
coherently many questions raised by the Court on conclusions
reached in his reports, and he was unable to explain certain
parts of the analysis contained in the reports. He arbitrarily
applied a 35-percent marketability discount to the subject
shares. He did not adequately discuss the publicly traded
companies which he compared to Eatel, and he did not set forth
their age, business, or product line with any specificity. He
made no mention of a hypothetical buyer or a hypothetical seller,
and, indeed, we read his expert report to be skewed in favor of a
low value for the stock.
Mr. Chaffe relied primarily on his 1989 report to ascertain
the value set forth in the 1991 report. We are unpersuaded that
the company valued in 1989 (DATA) was sufficiently similar to the
company valued in 1991 (Eatel) to make such reliance reasonable.
Whereas the 1989 report states that Mr. Chaffe toured DATA’s
facilities on October 10, 1989, there is nothing in his testimony
or the 1991 report to suggest that he did likewise before
preparing the 1991 report, or that he took any other meaningful
step to independently verify that Eatel’s operation in 1991 was
the same as DATA’s operation in 1989. Indeed, the 1991 report is
silent with respect to Eatel’s then-current business. Although
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