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Decedent was represented by independent and experienced
counsel in the transaction.3 The redemption transaction was
designed to be an “estate freeze”. The purpose of an estate
freeze, to minimize estate taxes, was explained to decedent by
her counsel before the redemption. The redemption price of $3
million was determined in part because Nikita Maggos’ attorney
believed they could support such a valuation for gift tax
purposes.4 In part, the price was determined by the amount
Nikita Maggos thought he could afford. Decedent and Nikita
Maggos did not negotiate the redemption price. Neither Nikita
Maggos nor decedent sought a formal valuation of the company
prior to the redemption. However, in January 1987, Nikita
Maggos’ accountants wrote to Robert T. Shircliff & Associates,
Inc. (Shircliff & Associates), requesting that Shircliff &
Associates review the draft financial results of PCAB to October
31, 1986, so that they could advise Nikita on the value of PCAB.
The purpose of obtaining the valuation was for estate planning.
Shircliff & Associates were in the business of consulting with
Pepsi bottlers and acting as business brokers in the purchase and
sale of Pepsi bottling franchises. Shircliff & Associates
prepared a preliminary valuation of PCAB’s business based in part
3Decedent’s attorney was Robert Hite.
4Nikita Maggos’ attorney was Victor Bezman, a partner in the
firm of Katten Muchin & Zavis.
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