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in public accounting with Peat Marwick & Mitchell and other
accounting firms. Von Allmen had substantial experience with
purchasing, operating, and selling various types of businesses.
He had no personal contacts or experience in the beauty supply
industry.
Olson had an undergraduate degree from the University of
Michigan in economics and a master's degree in business from
Columbia University. Olson worked for the Bank of New York for 9
years, part of the time as a vice president. She was the primary
person dealing with First National Bank of Cincinnati (the bank)
in obtaining the acquisition loan (described infra).
Group One's Offer to Purchase State Supply
In early 1987, Von Allmen received a telephone call from a
broker in Springfield, Missouri, advising him that State Supply
was for sale. Von Allmen and Olson conducted an investigation
and analysis of the financial background of State Supply (the
investigation). Based on his experience, Von Allmen believed
that the value of State Supply, as a distributor, would be equal
to three to five times "trailing earnings", which means the
earnings in the prior year. Believing that State Supply was a
high risk company, Von Allmen used a multiple in the range of 3-�
to 4 times earnings in determining a price to offer for the
shares. Von Allmen learned through the investigation that State
Supply had 1986 pretax earnings of approximately $1.5 million.
On June 2, 1987, Group One offered in writing (the offer) to
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