Estate of Ann H. Brookshire, Deceased, Harvey B. King, Independent Executor - Page 11

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               In determining the fair market value of decedent’s 219,710             
          shares of Brookshire common stock (representing 9.79 percent of             
          all outstanding shares of Brookshire common stock), petitioner's            
          two experts and respondent's expert agree that a discount is                
          appropriate to reflect the lack of marketability of the stock.              
          They disagree, however, as to the amount thereof.                           
               Because petitioner and respondent’s notice of deficiency               
          utilize the same $58.75 per-share value for the 112,884 shares of           
          Brookshire common stock that are not subject to the stock-                  
          purchase agreement, we need only address the valuation of the               
          106,826 shares of Brookshire common stock that are subject to the           
          stock-purchase agreement.                                                   
               Petitioner's first expert values the 106,826 shares of                 
          Brookshire common stock subject to the stock-purchase agreement             
          at $6,302,734 or $59.00 per share.  Petitioner's first expert               
          utilized:  (1) The guideline company method, comparing                      
          Brookshire's revenue, net income, earnings, cash-flow, and book             
          value with those of similarly sized, publicly traded corporations           
          operating grocery stores; (2) the discounted cash-flow method,              
          calculating the net present value and future earnings of                    
          Brookshire and the return on investment using a 9-percent rate of           
          return; and (3) the capitalization of dividends method, using a             
          2-percent yield rate.  Petitioner’s first expert also applied a             







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Last modified: May 25, 2011