- 36 -
with the compilations of data and explanations that each
provided.
In valuing Schlegel GmbH, Lahmann and Shapiro actually
calculated comparable discount rates. The assumed cash-flows and
sustainable profits, however, varied to such an extent that the
resulting fair market value estimates differed by approximately
$5.8 million. Evaluating the reports, we agree with respondent
that the contemporaneously prepared sales projections are the
most appropriate starting point for cash-flows, but Shapiro again
failed to investigate or to consider adequately specific facts
relating to Schlegel GmbH known at the valuation date. When
asked at trial whether a prospective buyer would have used his
methodology or would have visited the facility and talked to the
people involved in the business, Shapiro stated that “they
would-–they would go-–they should certainly go out and talk to
the people there, try to uncover any hidden problems that might
exist.”
Shapiro and Button used the management-prepared sales
projections in making their cash-flow estimates for Schlegel UK,
and the results of their cash-flow analyses are comparable. The
primary difference in their fair market value conclusions is
attributable to the discount rate and terminal value that each
calculated.
Page: Previous 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 NextLast modified: May 25, 2011