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Recapitalization was subject to a combined minority and
marketability discount of 40 percent.
5. Robert Furman a Key Person
At the times of the 1980 Gifts and the Recapitalization,
Robert actively managed FIC, and no succession plan was in
effect. FIC employed no individual who was qualified to succeed
Robert in the management of FIC. Robert's active participation,
experience, business contacts,8 and reputation as a Burger King
franchisee contributed to the value of FIC. Specifically, it was
Robert whose contacts had made possible the 1976 Purchase, and
whose expertise in selecting sites for new restaurants and
supervising their construction and startup were of critical
importance in enabling FIC to avail itself of the expansion
opportunities created by the Territorial Agreement. The
possibility of Robert's untimely death, disability, or
resignation contributed to uncertainty in the value of FIC's
operations and future cash-flows. Although a professional
manager could have been hired to replace Robert, the following
risks would still have been present: (i) Lack of management
until a replacement was hired; (ii) the risk that a professional
manager would require higher compensation than Robert had
received; and (iii) the risk that a professional manager would
not perform as well as Robert.
8 Robert developed close friendships with the cofounders of
BKC, especially James McLamore, along with Art Rosewall, BKC's
chief executive officer.
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