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average, support the application of marketability discounts in
the range of 30 to 45 percent. Mr. Magee analyzed several
factors with respect to the marketability of the estate shares,
such as earnings quality, dividend payment history, size of the
block of stock, prices of comparable investment substitutes,
management's stock redemption policies, capitalization of the
firm, and economic factors. In his analysis he noted certain
factors in support of a discount, including Peoples' interest
rate risk, the sewer tap ban, and the modest economic growth in
Peoples' market area. Mr. Fuller also emphasized the lack of
liquidity in Peoples stock, which was not subject to any
repurchase or employee stock option plan and was not easily sold,
as evidenced by the fact that a block of 100 shares had been
offered and available for sale for more than 5 years without
eliciting any expressions of interest.
While we recognize that elements of control may enhance
marketability, we do not think that the estate shares were
rendered marketable by virtue of their effective control.
No matter who was in control, Peoples was still a small,
community bank with limited growth opportunities, capitalized
with common stock that was not publicly traded and not easily
sold privately. A buyer of the estate shares would either have
to sell the block privately, cause Peoples to make a public
offering, or seek an acquiror. Any of those three options could
take a number of months, and require significant transaction
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