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several more serious problems with Mr. Schroeder’s income-based
approach. For all these reasons, we conclude that Mr.
Schroeder’s income-based analysis, like Ms. Walker’s, is entitled
to little weight.
Conclusion
Ms. Walker’s market-based appraisal of the Demco nonvoting
common stock was $211.20 per share; Mr. Schroeder’s market-based
appraisal was $303.03 per share. For the reasons set forth
above, Ms. Walker’s market-based appraisal significantly
understated Demco’s value. As we have explained, treating the
media note as a nonoperating asset would have increased Ms.
Walker’s market-based values by approximately $35 per share, even
after applying the 25-percent minority discount Ms. Walker
suggested. Similarly, using the correct projections for Demco’s
1992 earnings would have added approximately $103 per share to
Ms. Walker’s forecasted earnings based valuation, while using the
mean multiples of the comparable companies, instead of the lower
multiples chosen by Ms. Walker, would have added approximately
$88 per share to Ms. Walker’s historical performance measures
based valuation. Nevertheless, we still conclude that Mr.
Schroeder’s market-based appraisal somewhat overstated Demco’s
value, in part because it did not apply a minority discount to
the media note; we also conclude that it does not deserve
controlling weight because it used very few performance measures
and comparable companies.
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