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Kimball made no effort to compare the subject transaction to
transactions within the secondary offering studies that have
similar characteristics, such as where the stock is traded,
revenues, sales, and similar factors indicating analogous
transactions. Instead, he relied primarily on the mean and
median discounts of each study. Petitioner admits on brief that
Kimball relied very little on the secondary offering approach and
concedes that Kimball relied most heavily on the private
placement analysis in coming to his conclusion.
Kimball used the primary body of empirical evidence
concerning private placement data, as found in studies of
restricted stocks, to analyze the private placement market.
Kimball concluded that various surveys reviewed by him indicated
a cumulative average discount of 35 percent for restricted stock
in a publicly traded company. He ultimately concluded that a
32-percent discount was appropriate considering the combined
influences of all of the relevant factors under this approach.
Applying the 32-percent discount to the market price on the
valuation date results in a fair market value of $4.72 per share.
Petitioner also offered the expert testimony of Cotler to
establish the applicable discount. Cotler testified that he
analyzed numerous studies to determine the appropriate discount
for lack of marketability. From these studies, Cotler observed
that there was a mean discount of 34.73 percent for lack of
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