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companies that had a payout ratio and an increase in its 12-month
earnings similar to those of Willits, and applied its dividend
yield rate to Willits' current dividend. This process produced
an indicated value of $788 per share.
Tarbell analyzed the price-to-book value ratios and the
current returns on equity of the guideline companies and found
that there was a strong relationship between the ratios. He
selected two companies that had returns on book value similar to
Willits and determined that a multiple of 1.10 was appropriate to
apply to Willits' book value. This process resulted in an
indicated value of $887 per share.
Finally, Tarbell weighted the indicated values derived from
the various valuation methods according to his opinion of their
relative significance and concluded that the publicly traded
minority value of Willits stock was $882 per share, before
considering a discount for lack of marketability.
Tarbell opined that a 45-percent discount for lack of
marketability was appropriate due to the limited market for
Willits stock and the size of petitioner's block, and concluded
that the fair market value of the stock was $485 per share.
Petitioner's report does not state separately the amounts of the
limited market and blockage components of the discount.
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