-84-
generally exceeded (both before and after its acquisition by
Federal) and the 15-percent rate of return on equity that
petitioner projected its proposed acquisition of FIA would produce.
In sum, Mr. Fuller testified that Mr. Huck overvalued FIA's
lease portfolio by approximately $4 to $5 million, which results in
approximately $1.2 to $2.2 million in intangible assets.
3. Critique of Experts
Not unexpectedly, each expert criticized his colleague's
analysis. The following points highlight these disparate
perspectives.
Mr. Fuller opined that Mr. Huck simply used the portfolio's
expected yield (the rate at which petitioner expected the portfolio
to earn income) as the appropriate discount rate. Use of the
portfolio's expected yield, he insisted, assumes that no other
assets are necessary to realize that yield and treats the portfolio
as the equivalent of a fixed-income instrument. According to Mr.
Fuller, Mr. Huck ignored the fact that petitioner purchased a going
concern; the purchase included the FIA portfolio in addition to
other FIA assets, and the right to hire FIA's expert personnel (who
originated the equipment leases and turned the residual value into
profits). The presence of these other business assets, in Mr.
Fuller's opinion, was necessary to produce income at the yield
rate. Mr. Fuller contended that the 11.49-percent yield required
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