- 259 -
Third, contrary to the Kimball report’s emphasis on the
TBVIC multiple, we find that it is not a meaningful measure of
value in this case. In general, book value of tangible assets
would serve as a meaningful measure of value only if book value
was close to market value on the valuation date. Thus, tangible
asset values first should be adjusted to their respective fair
market values to make price-to-asset-value ratios more relevant.
Moreover, equipment varies from one company to another in age,
condition, and importance to the operations, so that price-to-
asset-value measures are difficult to implement on a comparison
basis and frequently are not helpful. See Pratt et al., Valuing
a Business 217 (3d ed. 1996).
Black Hills Trucking owned a variety of heavy specialized
equipment that was purchased anywhere from 1 to 40 years before
the valuation date. Mr. Kimball calculated the fair market value
of equipment (under the NAV method) to be $11.5 million as of
December 31, 1993, while net book value was $2.5 million. Such a
large disparity between book value and fair market value suggests
that TBVIC is not an appropriate basis for valuing Black Hills
Trucking.
Fourth, we disagree with Mr. Kimball that Dave True’s 58.16-
percent interest in Black Hills Trucking, valued as of June 4,
1994, should be treated as a noncontrolling interest. As we said
in the Belle Fourche section of this opinion, see supra pp. 229-
230, we disregard the buy-sell agreement in computing fair market
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