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of one approach to the exclusion of all others.
[Citations and fn. ref. omitted.]
Similarly, in the instant case we shall not disregard asset-based
value, in particular because there are certain aspects of Dunn
Equipment that point to the use of asset-based value. This was
acknowledged by Mr. Frazier in his report and by Mr. Pratt in
testimony, and although we disagree with aspects of both Mr.
Frazier’s and Mr. Pratt’s positions, we agree with the basic
decision to give some weight to asset-based value as well as
earnings-based value.
Mr. Frazier believed there was a substantial likelihood of
liquidation, given that the company’s return at the valuation
date was lower than the return on risk-free investments such as
Government bonds. He assumed a 50-percent chance of liquidation.
Therefore, he calculated an asset-based value of the company
equal to what he considered to be its liquidation value1 and gave
that value 50 percent of the weight of total value. He also
calculated an earnings-based value and gave that value the
remaining 50 percent of the weight of total value.
We find that Mr. Frazier’s method overestimates the
likelihood of liquidation. Although decedent’s shares represent
1 There is no question that Mr. Frazier did not consider all
the costs of liquidation, such as the costs involved in selling
and transporting equipment, and the reduced sales price for
equipment due to the increased short-term supply resulting from a
liquidation.
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