Norwest Corporation and Subsidiaries - Page 87

                                        -87-                                          
              Mr. Fuller acknowledged at trial that normally a purchaser              
         would not finance the acquisition of a lease portfolio with 100              
         percent equity.  He admitted that if a mixture of debt and equity            
         were used, he would be forced to lower the 15.6-percent discount             
         rate he had determined.  However, Mr. Fuller believed that the net           
         cash-flow from FIA's lease portfolio is, for the most part, an               
         equity cash-flow to the holder of the net equity investment in the           
         portfolio, which requires an equity rate of return to properly               
         discount it to present value.                                                
              Finally, petitioner criticized Mr. Fuller's use of the 25-              
         percent premium Commercial paid in 1986 as another basis for                 
         determining the value of FIA's intangible assets in 1989.                    
         Petitioner first complains that Mr. Fuller ignored industry                  
         practice, which is intended to reflect the negotiated value of               
         intangible assets as an amount over and above net asset value.  And          
         second, petitioner maintains, circumstances were different in 1986           
         and 1989 because when Commercial purchased FIA in 1986, it acquired          
         the services of Mr. Rafanello, FIA's most important employee,                
         whereas petitioner did not acquire Mr. Rafanello's services in               
         1989.                                                                        
              H. Conclusion                                                           
              We have considered the qualifications and experience of the             
         parties' experts, as well as the substance and reasoning of their            
         reports.  The difference in their respective valuations of FIA's             






Page:  Previous  69  70  71  72  73  74  75  76  77  78  79  80  81  82  83  84  85  86  87  88  Next

Last modified: May 25, 2011