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believes that bank stocks are more marketable than other types of
stock. We therefore are unable to accept his recommendation.
The Court’s Valuation
We recognize that the Company is a small bank holding entity
operating only one bank in a rural Nebraska community. The
Company has limited growth opportunities because the Bank has a
small defined market. Furthermore, the Company is capitalized
with common stock not publicly traded and not easily sold
privately.
We believe that a hypothetical seller and purchaser of the
common stock would take into account that any subsequent sale of
the common stock would require a private sale by the owner of the
stock, a public offering by the Company, or a complete
acquisition of the Company. Any of those three options could
take an extended time period and involve significant transaction
costs. Furthermore, we also believe that most of the concerns
regarding lack of marketability relate to the lack of control
associated with any transferred block of stock. Accordingly, we
apply a discount of 40 percent both for lack of control and
marketability to the prediscount fair market value of the Company
stock as determined by petitioners’ expert. We therefore hold
that on the date of the transfers, the value of each transferred
block of stock was $211,186.7
We have considered all of the arguments raised by the
7 ($51.38 per share x .60) x 6,850 shares.
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