Estate of Ann H. Brookshire, Deceased, Harvey B. King, Independent Executor - Page 14

                                       - 14 -                                         

          only the national economy, but also the specific economies of the           
          geographic region in which Brookshire operated its stores.                  
               In selecting earnings multiples, petitioner's first expert             
          properly considered the increased competition from Wal-Mart and             
          the decrease in Brookshire’s net income for Brookshire’s fiscal             
          year ending September 28, 1993.                                             
               For the reasons stated, we agree with petitioner's first               
          expert witness that, before applying any discount, the date-of-             
          death value of decedent's 106,826 shares of Brookshire stock                
          equals $11,493,409 or $107.59 per share.                                    
               With regard to the discount for lack of marketability, the             
          parties' three expert witnesses rely on various market studies              
          which indicate that discounts for lack of marketability often               
          fall in a range of 23 to 45 percent with an average of                      
          approximately 35 percent for the restricted stock of a publicly             
          traded company.                                                             
               It is clear that decedent's block of 106,826 shares was not            
          readily marketable and that any hypothetical purchaser would                
          demand a significant discount to account for that fact.                     
               Certainly, the consistent history of Brookshire's strong               
          current financial position and liquidity as well as the quality             
          management would make Brookshire an attractive investment.  There           
          still existed, however, no public market in which to sell the               







Page:  Previous  1  2  3  4  5  6  7  8  9  10  11  12  13  14  15  Next

Last modified: May 25, 2011