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stock in issue represented a significant percentage of the
then-outstanding shares, 27.8 percent. With the average volume
during the first 6 months of 1993 at 5,197, Cotler concluded that
it was improbable that the FOH stock could have been sold in the
public market within a reasonable time frame.
Cotler pointed to the size of the block, FOH's recent and
expected financial performance, and the overall trading
characteristics of the FOH common stock as reasons why it would
be difficult to sell the FOH stock at a price equal to the
publicly traded common stock. Based upon this analysis, his
experience as an investment banker, and other information
available to him, Cotler concluded that the fair market value of
the FOH stock at the valuation date should be $4.79, a 31-percent
discount.
Respondent determined that the value of the blocks of FOH
shares that were held in the trusts must be discounted between
10 and 17 percent to reflect the lack of marketability.
Respondent supports this determination with the expert testimony
of David N. Fuller (Fuller).
Fuller agreed with petitioner's experts that a discount for
lack of marketability was appropriate when disposing of the
separate minority interests in FOH. He testified that there were
three viable options for selling the separate blocks of FOH
stock: (1) A registered secondary offering, (2) a private
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