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than the guideline companies;14 (e) there have been no sales of
Rock Hill stock and only limited family and insider sales of Home
stock at about book value; (f) the Home and the Rock Hill stocks
are not registered or traded on any exchange or over the counter;
and (g) the Home and the Rock Hill stocks represent very small
minority interests that have no ability to direct the affairs of
either company or cause the sale of its assets. These facts
support application of an above average discount for lack of
marketability.
Respondent disagrees with Hawkins' use of some studies of
sales of restricted stock and initial public offerings which
respondent claims contained errors. Respondent also asserts that
the companies in the studies used by Hawkins were not comparable
to Home and Rock Hill. Respondent points out that Hawkins did
not relate the companies in the studies to Home and Rock Hill in
terms of marketability, size, profitability, history, risk,
speculativeness, or growth. However, Hakala also failed to
compare the companies in the studies to Home and Rock Hill on
those points.
Hawkins and Hakala mostly cited the same studies. Hakala
cited eight studies in which the average discount for lack of
marketability ranged from 30 percent to 60 percent. He
14 Stocks with low dividends typically suffer more from lack
of marketability than stocks with high dividends. Pratt, supra
at 358.
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