BTR Dunlop Holdings, Inc. - Page 36




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          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.                                                                 







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Last modified: May 25, 2011