- 17 -
valuing Schlegel GmbH. Herbert T. Spiro testified as a rebuttal
expert witness on behalf of petitioner.
Despite generally using the same methods of valuing the
subject companies, the experts reached fair market value
estimates that are extremely far apart. The following chart
lists the values at which the experts arrived:
Shapiro Button Gooch Lahmann
Schlegel UK $49.8 million $20 million $21.7 million --
Schlegel GmbH* 8.4 million -–-- $2.6 million
*exclusive of the silent partnership interest.
Schlegel UK
Shapiro
Shapiro began his analysis by calculating the fair market
value of Schlegel UK using the discounted cash-flow (DCF) method.
The DCF method measures fair market value by calculating the
present value of the stream of future cash-flows of a company.
There are three components to the DCF method: (1) The cash-flow
projections for a forecasted period; (2) the terminal value; and
(3) the appropriate discount rate. Terminal value is calculated
by adjusting cash-flows in the final period to represent the
future cash-generating capability of the company. This
“normalized” cash-flow figure is then capitalized as a perpetuity
by the previously determined discount rate, adjusted for some
level of growth that can be expected to continue into perpetuity.
The resulting terminal value is then discounted back to present
Page: Previous 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 NextLast modified: May 25, 2011