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Finally, Hahn turned his attention to making adjustments to
the Sta-Home for-profit entities’ stock for “control premiums”
and lack of marketability. He hypothecated that no additional
premium for control of the Sta-Home tax-exempt entities was
appropriate because the sale of 100 percent of the Sta-Home tax-
exempt entities was contemplated (therefore, all of the value of
the companies would be included in the transaction price). He
also concluded that any adjustment to reflect the fact that
Mississippi presented an unattractive market for the sale of the
Sta-Home tax-exempt entities had been incorporated into his
adjusted balance sheet valuation.
With respect to the value of the stock held by the
individual shareholders, Hahn noted that no one individual could
control the Sta-Home tax-exempt entities. While he believed that
this usually would require that a minority discount be reflected
in the value of the shares held by the noncontrolling
shareholders, he concluded that a minority discount was not
appropriate here because the shares represented equity interests
in a loss corporation. He noted, however, that at the time of
the asset transfer the appropriate control premium and market
discount in the home health care industry were approximately 36
percent and 26 percent, respectively.
D. Expert Testimony for Respondent
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