-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 NextLast modified: May 25, 2011