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April 30, 1994, whereas Mr. Kimball adjusted the June 4, 1994,
balance sheet. As a result, the final Lax report arrived at a
net asset value as of June 3, 1994, of $44,643,191, which was
slightly lower than the amount computed by Mr. Kimball.
Next, Mr. Lax applied a combined minority and marketability
discount from net asset value of 60 percent. He derived the
combined discount by examining three published studies containing
economic and market price information on publicly registered real
estate partnerships that traded in secondary markets. According
to the final Lax report, the studies showed that partnerships
owning income producing properties but not making regular cash
distributions sold at average combined discounts of 43 percent in
1992, 51 percent in 1993, and 76 percent in 1994.
Mr. Lax noted that the combined discounts reported in the
studies reflected the lack of control of limited partners over
partnership distributions and liquidation. He explained that the
same lack of control applied to limited partners in private
partnerships. In addition, Mr. Lax found that private
partnerships were less marketable than the study partnerships,
because private partnerships did not trade on an informal
secondary market. He also observed that private partnerships
often placed burdensome transfer restrictions on ownership
interests.
On the basis of the foregoing, Mr. Lax concluded that
general partnership interests in True Ranches were similar to the
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