- 28 -
assigned to Specialty, $300,000, and subtracted the value he
assigned to the Specialty preferred stock, $62,500. Mr. Stewart
then applied a 35-percent lack of marketability discount to this
figure and determined a value of $155,000 for the total common
stock of Specialty.20 Mr. Stewart applied the number of
outstanding shares, 1,000, and determined a value of $155 per
share for Specialty common stock.
Mr. Stewart determined that the value of Specialty common
stock under the DCF method, before marketability and minority
discounts, was $295,000. This determination was made by taking
the value he assigned to Specialty under the income approach,
$358,000, and subtracting the value he assigned to the Specialty
preferred stock, $63,000.21 Mr. Stewart applied a 20-percent
minority discount and a 35-percent lack of marketability
discount, yielding an aggregate Specialty common stock value of
$150,000, or $150 per share.22
Mr. Stewart gave approximately equal weight to the market
approach and the income approach, thereby determining the
20Mr. Stewart did not apply a minority discount because, in
his opinion, the market approach already produces a per-share
value for a minority interest.
21In his valuation of Specialty common stock, Mr. Stewart
rounded the value he assigned to Specialty preferred stock,
$62,500, up to $63,000.
22Mr. Stewart rounded this number down from the $153,000
figure that application of the discounts yields.
Page: Previous 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 NextLast modified: May 25, 2011