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guideline company multiples or the Belle Fourche financial
fundamentals, (2) which of three multiples he applied to Belle
Fourche’s fundamentals, or (3) how he weighed each resulting
product. Without more information we cannot evaluate the
reliability of Mr. Lax’s results.
Second, the final Lax report calculated the equity value of
Dave True’s 68.47-percent interest in Belle Fourche on a fully
marketable noncontrolling basis without first valuing the company
as a whole. This significantly departed from the initial Lax
report’s guideline company approach, which first valued the
company on a marketable controlling basis, and then applied a 40-
percent marketability discount. Even though both reports used
the guideline company method, we believe the approaches were
substantially different and find it remarkable that both reports
arrived at the same ultimate value of roughly $4,100,000 for Dave
True’s interest. This suggests that the final Lax report was
result-oriented.
Third, while Mr. Lax conceded that Dave True’s 68.47-percent
interest had voting control over Belle Fourche, he averred that a
hypothetical buyer would not pay more for such voting control
because he could not control the related True companies that
Belle Fourche depended on for its business (e.g., True Oil, True
Drilling, and especially Eighty-Eight Oil). We disagree.
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