Estate of Helen J. Smith, Deceased, Frederic L. Foill II and Cassandra F. Vallery, Co-Executors - Page 15




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                    Asset-Based Value                                                 
               In connection with determining an asset-based value, Mr.               
          Hitt used a 38-percent minority interest discount.  To calculate            
          this number, he began with Mergerstat Review, which contains data           
          from sales of bank stock in merger transactions, and made                   
          adjustments to account for the fact that JFI was not a bank.                
          Applying his minority interest discount of 38 percent to the                
          undiscounted per-share value of $1,818 resulted in a value of               
          $1,127 per share.                                                           
               To compute a lack of marketability discount, Mr. Hitt                  
          started with a figure of 45 percent, based, according to him, on            
          a comparison to restricted securities and studies of the prices             
          of stocks before initial public offerings.  He increased the                
          discount to 50 percent because he believed there would be some              
          difficulty in selling the farm and to account for costs in                  
          selling the farm.4  Applying the lack of marketability discount             
          to the discounted per-share value of $1,127 resulted in a value             
          of $564 per share.5                                                         




               4 Mr. Egan used a 50-percent minority interest discount and            
          a 35-percent lack of marketability discount, very similar, in end           
          result, to Mr. Hitt’s 38-percent minority interest discount and             
          50-percent lack of marketability discount.                                  
               5 If Mr. Egan had applied his lack of marketability discount           
          before weighting the two values, as Mr. Hitt did, his asset-based           
          value would have been $591 per share.                                       





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Last modified: May 25, 2011