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prepared a confirming appraisal for petitioner. The report was
intended to determine the value of the assets for purposes of a
section 1060 allocation.
In his analysis, Lee applied the discounted cash-flow method
over the 5-year period covered by the agreements. He calculated
the cash-flow over the 5 years covered by the agreements under
two scenarios: (1) Petitioner was protected by the agreements;
and (2) where petitioner was harmed by the competition and
disclosure of information by Scherer. Then, he determined the
differences in the cash-flow which would be forgone in the
absence of the agreements. Lee stated that the discounted
present value of the differential between the cash-flows in the
foregoing scenarios was the fair market value of the agreements.
In this appraisal, Lee assigned a value of $2 million for the
covenant not to compete, and $1 million for the secrecy
agreement.
Finally, the Court recognized as an expert, Joseph H. Wildt
(Wildt), an engineer with respondent. He possesses an M.S. in
valuation, and a B.S. in electrical engineering. He acquired the
master's degree in 1981. Also, Wildt has attended numerous
courses presented by the American Society of Appraisers regarding
business valuation. Finally, Wildt had been a senior member of
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