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agreements by determining petitioner's value without the
agreements and subtracted that value from the previously
determined value of the business with the agreements. The
difference in value of the business was held to be directly
attributable to the agreements.
Dr. Schutte valued petitioner's business without the
agreements to be $4,924,636. In that vein, he calculated that,
in the aggregate, prior to the consideration of the actual
transaction value, the agreements were worth $3,330,413. Then,
he divided $3,330,413 by $8,255,049 to reach a figure of 0.4034.
In other words, Dr. Schutte believed that the value of the
agreements was equivalent to 40.34 percent of the purchase price
of $8.14 million.
Second, petitioner presented Thomas P. Lee (Lee) an
appraiser of business and intangible assets for Arthur Andersen,
L.L.P. Lee possesses an M.B.A. from New York University. He
also has an M.S. as well as a B.S. in civil engineering from the
Polytechnic Institute of New York. Lee is a member of, and has
attended conferences and seminars with, the American Society of
Appraisers. Prior to his tenure with Arthur Andersen, L.L.P.,
Lee was employed by several accounting and valuation firms
including, among others, Ernst & Young, L.L.P. Subsequent to the
1989 transaction, while employed with Ernst & Young, L.L.P., Lee
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