- 49 -
In particular, a hypothetical buyer or seller would have to
consider the following factors in valuing the 1,226 shares of JPMS
common stock at the moment of Mr. Mitchell's death: (1) Whether it
would be necessary to increase JPMS' advertising and marketing
expenses;24 (2) whether litigation concerning Mr. DeJoria's
compensation would ensue; (3) whether the lack of a ready or
available market for the stock would affect its fair market value;
(4) whether and how JPMS would continue its history of successful
product development and styling leadership; (5) whether rumors
concerning JPMS "going retail" would adversely affect its
relationships with salons; (6) whether JPMS' history of unreliable
suppliers would continue; (7) whether JPMS would solve its
inventory control and financial information reporting problems; and
(8) whether JPMS' thin management and total reliance on Mr. DeJoria
would hinder its performance.
Nonetheless, Mr. DeJoria stepped in to single-handedly run
JPMS upon Mr. Mitchell's death. Mr. DeJoria had always overseen
JPMS' marketing. Indeed, despite his reputation for creativity,
Mr. Mitchell had not succeeded in marketing his product line in the
late 1970's. Although there is no doubt that Mr. Mitchell's fame
was an important component in launching JPMS in the early 1980's,
24 William E. Peplow, vice president of salon relations
for Redken, wrote a report and testified on petitioner's behalf.
He foresaw that JPMS would have to increase its advertising
budget to sustain sales after Mr. Mitchell's death.
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