- 224 -
Respondent allowed a 10-percent minority discount in
valuing the 17.23-percent interest transferred by Jean True as of
June 30, 1994. Therefore, respondent asserts that Belle
Fourche’s marketable minority value was $15,736,185 on that date.
d. Court’s Analysis
The positions of the parties and the Court’s determination
regarding the marketable value of Belle Fourche’s total equity at
each of the valuation dates are summarized infra p. 240.
As with True Oil, we find it inappropriate to use only the
guideline company method to value the subject interests in Belle
Fourche. We believe that a hypothetical buyer would consider the
company’s underlying asset value in negotiating a purchase price,
especially if purchasing a controlling interest. We therefore
consider both the guideline company and net asset value methods
to value the Belle Fourche interests at issue in these cases.
First, however, we address the strengths and weaknesses of the
experts’ reports.
We have serious reservations about Mr. Lax’s approach to
valuing Belle Fourche; thus, for the reasons stated below, we
reject the final Lax report’s valuation conclusions.
First, the final Lax report’s guideline company analysis
suffers from the same lack of substantiation as its True Oil
analysis. As the quoted material on page 220, supra, indicates,
Mr. Lax provided no data showing: (1) How he computed the
Page: Previous 214 215 216 217 218 219 220 221 222 223 224 225 226 227 228 229 230 231 232 233 NextLast modified: May 25, 2011