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discounts are either unreasonably low (given the factors limiting
marketability discussed above) or nonexistent, due to
respondent’s incorrect assumptions regarding swing vote
potential.
Based on the record before us, we apply a 30-percent
marketability discount to the minority interests in True Oil
valued as of January 1, 1993, June 4, 1994, and June 30, 1994.
We derive this figure first by acknowledging that the subject
interests in True Oil are less marketable than actively traded
interests, for reasons previously stated. We then use Mr.
Kimball’s discount as a starting point. Mr. Kimball did not
explain clearly how he used market data to compute his
marketability discounts. It appears that he chose a 40-percent
discount to fall within the high range of discounts observed in
the restricted stock studies (26 to 45 percent). We believe that
the restricted stock studies provide more relevant data than the
pre-IPO studies, because True Oil interests are subject to State
law transfer restrictions and because True Oil is not comparable
to a company on the verge of going public. Finally, we reduce
the proposed 40-percent discount to 30 percent, because Mr.
Kimball improperly considered the True Oil buy-sell agreement in
developing his marketability discounts.
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