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sales of the privately owned Nebraska banks as a comparison, Mr.
Wahlgren arrived at a fair market value of $6,708,900 for the
Bank. Mr. Wahlgren established the fair market value of the Bank
at 1.49 times greater than the historical book value of the
stockholders’ equity and at 1.10 times greater than the adjusted
book value of the stockholders’ equity.
Having derived the fair market value of the Bank, Mr.
Wahlgren proceeded to compute the fair market value of the
Company on a net asset value basis. After substituting the fair
market value of the 94.6-percent interest in the Bank
($6,346,619) for the adjusted book value of the 94.6-percent
interest in the Bank ($5,769,654) on the Company’s books and
subtracting the liabilities from the value of all the Company
assets, Mr. Wahlgren arrived at a $6,679,244 fair market value
for the Company.5 As there were 130,000 shares of stock
outstanding, Mr. Wahlgren established that each share was worth
$51.38 before considering any discounts. Mr. Wahlgren applied a
10-percent minority discount, which reduced the value of each
share to $46.24.
Mr. Wahlgren then applied a 65.77-percent discount for lack
of marketability using the Quantitative Marketability Discount
Model (the QMDM model) proposed by Z. Christopher Mercer in his
5 The Company had other minor assets besides the 94.6-
percent interest in the Bank. For example, on its books, the
Company listed approximately $290,000 in marketable securities
and $40,000 in notes receivable.
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Last modified: May 25, 2011