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controlling interest. Mr. Lax’s approach to valuing the
different categories of fixed assets was reasonable and well
documented. Furthermore, Mr. Kimball and respondent agreed with
Mr. Lax’s net asset value conclusions.
We disagree, however, with the conclusion of the final Lax
report that a 50-percent discount should be applied to arrive at
the fair market value of Dave True’s 58.16-percent interest. Mr.
Lax provided no empirical evidence to support this reduction. At
trial, Mr. Lax tried to distinguish this discount from the 50-
percent marketability discount taken in the initial Lax report.
He explained that a reduction was necessary because a
hypothetical buyer would be forced to sell immediately the
company’s assets to avoid additional operating losses. However,
this statement contradicted Mr. Lax’s earlier testimony, in which
he explained that he had computed Black Hills Trucking’s net
asset value assuming an orderly disposition of assets, not a
forced liquidation. If we accept that a hypothetical buyer would
compute entity value under the orderly disposition premise, there
is no reason for us to assume that the buyer would value a 58.16-
percent interest in Black Hills Trucking under any other
valuation premise. Moreover, the initial and final Lax reports
both arrived at the same ultimate value of $3,179,530 for Dave
True’s interest using very different assumptions regarding
marketability. This suggests that the final Lax report was
result-oriented.
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