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The estate’s first expert, Mr. Kramer, also considered an
asset, income, and market approach and ultimately concluded that
Renier’s valuation should be based on an average of the results
indicated by the income and market approaches. Through this
averaging process, Mr. Kramer concluded that Renier’s shares had
an estimated value of $36.89 per share and that decedent’s 22,100
shares therefore had a total value of $815,158.50 on the
valuation date.
The estate’s second expert, Mr. Lannom, did not use an asset
or income approach but made two market approach calculations
using data on the sales of privately held companies supplied by
the Institute of Business Appraisers. In addition, Mr. Lannom
applied four different “rules of thumb” to value Renier. Using
his market approach and rules of thumb, Mr. Lannom arrived at
various values for Renier ranging from a low of $946,000 to a
high of $1,100,000. Mr. Lannom then added a “key-man” discount
equal to 10 percent of the value of the operating assets.
Finally, Mr. Lannom concluded that decedent’s 88.4-percent
interest in Renier was worth approximately $852,000 on the
valuation date.3
3 Although Mr. Lannom testified that his estimate of the
value of decedent’s interest in Renier was $825,000, the
calculations in his report, as amended in his trial testimony,
indicate that he actually concluded that decedent’s interest was
worth $852,000 and apparently made a transposing error.
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