- 58 -
petitioner as little more than a collection of physical assets and a
distribution network with nothing to distribute. H�agen-Dazs’ cold
shoulder to Mr. Hewit’s overture in his May 16, 1988, letter
concerning the possible sale of the nonbanner business to an unrelated
third party, and the abandonment of any further effort to sell by
Martin, is probative, not only of the effect of H�agen-Dazs’ veto on
petitioner’s marketability--and its market value--but also of the
likelihood that H�agen-Dazs would have used such a veto.
Another factor having a depressing effect on fair market value is
the lack of value that H�agen-Dazs attached to petitioner as an
ongoing business concern. This is demonstrated by the refusal of
H�agen-Dazs to consider buying any of petitioner’s assets beyond a few
business records that documented the sales to the supermarkets.
Despite petitioner’s investment in refrigerated trucks and warehouse
facilities during the mid-1980's--which contributed to the anemic
position of its net current assets and its inability to pay dividends-
-H�agen-Dazs still considered petitioner’s physical plant and
equipment to be substandard for purposes of distributing H�agen-Dazs
ice cream.
We must also consider the effect of petitioner’s being a small,
family-owned business on the sale by either Arnold or Martin of his
interest in petitioner without the sale of the other interest. While
we do not assign a precise value to this discount factor, the closely
held nature of petitioner and the reluctance of a third party to buy
into a family-owned business, especially one with the handicaps we
Page: Previous 48 49 50 51 52 53 54 55 56 57 58 59 60 61 62 63 64 65 66 67 NextLast modified: May 25, 2011