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which was an area of rapid population growth.
We accept IPC's valuation under the EBITDA multiple approach
as the most accurate measurement of value available, but we do
not accept the percentages of minority interest and marketability
discounts that were applied. We also reject IPC's use of a
multiple rate of 5.0 as unreasonable in light of FIC's growth
potential and the prevailing economic conditions.
At time of the Recapitalization, FIC had only nine Burger
King restaurants open but held a right of first refusal that
provided FIC with a protected territory in four southwest Florida
counties that were experiencing rapid population growth. Because
many of the FIC restaurants were new at the time of the
Recapitalization, we think that a prospective purchaser of stock
in FIC would expect earnings from existing restaurants to
increase as an area presence was established and store sales were
increased; the fact that FIC had the ability to block potential
Burger King franchisees from entering its market would only
strengthen such an expectation. Since the exercise of the right
of first refusal would enable FIC to open additional restaurants
in the Protected Territories, we think that a prospective
purchaser would be bullish regarding FIC's potential for earnings
growth from expansion.
Because we think that IPC has not properly taken into
account FIC's potential for growth, we find 6.0 times EBITDA to
be the proper multiple to be employed in the valuation of the FIC
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