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for risk and illiquidity. Respondent argues that petitioner's
experts' analyses were essentially based upon subjective judgment.
In fact, respondent believes that petitioners' experts failed to
offer a credible basis for their extraordinary risk or illiquidity
discounts.
Respondent further argues that Mr. Weiksner's "normalized"
earnings model, which he applies over a 3-year period, is
inaccurate and misleading because 2 of the 3 years ended after the
valuation date; thus, the figures for those years are essentially
a projection rather than an analysis of actual results.
With regard to Messrs. Weiksner's and McGraw's discounted
cash-flow analyses, respondent first argues that these analyses
fail to confirm the comparative companies method values these
experts determined. Respondent posits that Mr. Weiksner's
discounted cash-flow analysis assumes that Mr. DeJoria's future
compensation will conform to Mr. DeJoria's expectation of $12
million in fiscal year 1990 and $17 million per year thereafter.
However, according to respondent, Mr. Weiksner's discounted cash-
flow analysis actually presumes no control over Mr. DeJoria's
compensation or any other element of JPMS' cash-flows. Thus,
respondent argues that Mr. Weiksner's result is a minority interest
value rather than a control value.
2. Petitioner's Arguments
Petitioner counters that Mr. Hanan's valuation has four
erroneous bases: (1) Nonexistent "projections" of Mr. DeJoria; (2)
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