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marketing. Mr. Lax used the same group of companies to value
True Oil, Eighty-Eight Oil, and Smokey Oil.
Mr. Lax applied EBDIT, EBIT, EBT, and book value multiples
to Eighty-Eight Oil’s financial results for the 12-month period
ending May 31, 1994. As with the other True companies, Mr. Lax
did not provide supporting schedules showing how he calculated
the guideline company multiples and Eighty-Eight Oil’s financial
fundamentals.
The final Lax report concluded that the fair market value of
Eighty-Eight Oil’s total equity on a marketable minority basis
was $40 million on June 3, 1994.
c. Respondent’s Position
Respondent offered no expert testimony or other evidence
regarding Eighty-Eight Oil’s total equity value on the relevant
dates. Instead, respondent agrees with Mr. Kimball’s marketable
minority value of $25,174,683 as of January 1, 1993, and with Mr.
Lax’s “entity value” of $40 million as of June 3, 1994.
Respondent did not explain why he rejected Mr. Kimball’s June 4,
1994, value or how he justified the large disparity in entity
values between proximate valuation dates.
Respondent also argues, as he did with True Oil, that Dave
True’s 38.47-percent interest owned at death is not entitled to a
minority discount, because it represented a significant ownership
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