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measures, Ms. Walker concluded that the publicly traded
equivalent value of Demco’s equity was $4,900,000. This is not
materially different from the $4,914,000 value Ms. Walker
determined using historical performance measures.
Conclusion of Ms. Walker’s Original Report
Giving great weight to the two guideline company approaches
(historical performance and 1992 forecasted earnings), and giving
very little weight to a capitalized distributions approach,15 Ms.
Walker concluded that the publicly traded equivalent value of
Demco’s equity was $4,890,000. After applying the 40-percent
lack of marketability and 5-percent nonvoting discounts, Ms.
Walker concluded that the fair market value of the Demco
nonvoting common stock on the date of the gifts was $211.20 per
share.16
Ms. Walker’s Revised Report
In February 1999, Ms. Walker prepared a revised report
appraising the value of the Demco stock. This report was
prepared in response to respondent’s criticism that Ms. Walker’s
original report had failed to include an income-based
determination of Demco’s value. In response to respondent’s
15 See supra note 10.
16 The calculation is ($4,890,000) times (.6) times (.95)
divided by (13,200) equals ($211.16) per share, which Ms. Walker
rounded to $211.20.
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