Estate of Helen J. Smith, Deceased, Frederic L. Foill II and Cassandra F. Vallery, Co-Executors - Page 33




                                       - 33 -                                         
          assets ratio, FNBW’s was substantially higher, indicating that              
          FNBW was financed more through equity than the median.  Mr. Egan            
          summed up by stating:  “However profitable the asset base of                
          * * * [FNBW], the conservative nature of those assets does                  
          penalize the company’s income growth and potential therefor.”               
               Considering all of the “qualitative” and “quantitative”                
          factors discussed above, Mr. Egan felt that FNBW was                        
          substantially less valuable than the median comparable company.             
          To account for these factors, he applied a discount of 30                   
          percent.                                                                    
                    Lack of Marketability Discount                                    
               To calculate a lack of marketability discount, Mr. Egan used           
          the same analysis, based on restricted stock sales, that he used            
          with respect to JFI, and applied the same figure, 35 percent.               
               To compute the per-share value of FNBW, Mr. Egan began with            
          his undiscounted value of $16 million, or $160 per share.  He               
          discounted this by 30 percent for general qualitative and                   
          quantitative factors, then discounted the result by 35 percent              
          for lack of marketability, producing a value of $73 per share.              
               Court’s Analysis                                                       
               We find Mr. Egan’s analysis of the undiscounted value of               
          FNBW, based on the ratios of price to net worth, earnings and               
          dividends of comparable companies, to be cogent and persuasive.             
          However, we do not believe that Mr. Egan has made a persuasive              






Page:  Previous  23  24  25  26  27  28  29  30  31  32  33  34  35  36  37  38  39  40  41  42  Next

Last modified: May 25, 2011