- 41 -
discount20 to the value he determined through the comparative
companies analysis, resulting in a $29.5 million value for the
1,226 shares of JPMS common stock.
In addition to his comparative companies analysis, Mr. McGraw
utilized a discounted cash-flow analysis, determining a pro rata
equity value of $49.5 million. In this analysis, he also applied
a 45-percent discount for lack of marketability, yielding a $27.2
million value for the 1,226 shares of JPMS common stock.
Mr. McGraw weighed his comparative companies analysis more
heavily than his discounted cash-flow analysis; in his opinion, the
comparative companies analysis was the "more reliable indicator of
value". Accordingly, relying on this analysis, Mr. McGraw
concluded that the fair market value of the 1,226 shares of JPMS
common stock was approximately $29 million.
B. Valuations of Respondent's Experts
1. The Hanan Report
Respondent offered Martin D. Hanan, president of Business
Valuation Services, Inc. (BVS), as an expert witness. He has
worked as an appraiser for many years. Mr. Hanan valued the 1,226
shares of JPMS common stock at $81 million, relying on both the
comparable companies21 and discounted cash-flow analyses.
20 On the basis of Mr. McGraw's methodology, no discount
for minority interest was taken.
21 Mr. Hanan refers to this approach as the "guideline
company" approach.
Page: Previous 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 NextLast modified: May 25, 2011