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nonmarketable controlling value for Dave True’s 58.16-percent
interest of $3,179,530.
The final Lax report calculated the same controlling
marketable equity value on a net asset value basis as the initial
Lax report. However, Mr. Lax reduced the controlling value by 50
percent to reflect the fact that a 58.16-percent interest in
Black Hills Trucking would not be entitled to a control premium.
Mr. Lax explained that the 50-percent reduction was not a
marketability discount; instead it reflected Mr. Lax’s impression
that a willing buyer would not pay a price based on a
proportional value of the company’s underlying assets. He
reasoned that because Black Hills Trucking operated at a loss, a
hypothetical buyer with a controlling interest would liquidate
the company’s assets as soon as possible to stem further losses.
Such a rapid disposition of specialized equipment within a
limited geographic region generally would depress value by 50
percent, according to Mr. Lax.
Thus, the final Lax report concluded that the fair market
value of a 58.16-percent equity interest in Black Hills Trucking
was $3,179,530 as of June 3, 1994.
c. Respondent’s Position
Respondent offered no expert testimony or other evidence
regarding Black Hills Trucking’s total equity value on the
relevant dates. Instead, respondent adopted the net asset value
conclusions of the final Lax report and treated $10,933,730 as
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