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therefore understated Demco’s earning power and value. In fact,
Ms. Walker testified that under her analysis, Demco’s ownership
of the media note–-a $1,080,000 face amount, fully
collateralized, interest bearing asset--did not materially
increase the value of the Demco stock. By contrast, the
nonoperating asset method used by Mr. Schroeder took the value of
the media note into account, by adding it to the guideline value
based on his performance measures, and we believe it is
preferable to Ms. Walker’s approach in that respect.
In her testimony, Ms. Walker admitted that Mr. Schroeder’s
treatment of the media note was a reasonable approach. However,
Ms. Walker also stated that in her opinion, a minority discount
should be applied to the value of the media note under that
approach, because a minority stockholder could not require
liquidation of Demco and thus could not realize the note’s full
value.
We agree with Ms. Walker on this point. We conclude that
although Mr. Schroeder’s treatment of the media note is
preferable because it recognizes the note’s value, it somewhat
overstates that value to a minority stockholder. However, even
if the 25-percent minority discount Ms. Walker proposed at trial
were applied to the value of the media note, in addition to her
40-percent lack of marketability and 5-percent nonvoting stock
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