- 45 -
have been approximately $300 per share, approximately $88 per
share higher than the historical performance measures value in
Ms. Walker’s original report.24
We have similar concerns with Ms. Walker’s choice of
multiples in her forecasted earnings approach. Ms. Walker’s
original report discussed the forecasted earnings multiples of
only two of the seven comparable companies. Moreover, the
multiples Ms. Walker used were lower than even those two
companies’ multiples; the stated reason for this was that Demco
was predicting higher earnings growth.
Mr. Schroeder’s Guideline Company Approach
Notwithstanding the foregoing criticisms of Ms. Walker’s
guideline company approach, we do not believe Mr. Schroeder’s
guideline public company approach deserves controlling weight.
As noted above, Ms. Walker’s guideline analysis was thorough and
well explained; it is still entitled to some weight. In
addition, Mr. Schroeder’s approach somewhat overstates the media
note’s effect on value, because it does not apply a minority
discount. We also accept Ms. Walker’s criticism that it would
have been preferable if Mr. Schroeder had used more than three
guideline companies. Moreover, we note that Mr. Schroeder used
24 The statement in the text assumes that each performance
measure is equally weighted. Ms. Walker stated that she gave the
earnings-based measures greater weight, but we are unable to
determine the weighting she used.
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