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We conclude that the absence of a candid valuation for the
Sta-Home tax-exempt entities’ intangible assets explains the
considerable gap between the adjusted balance sheet value
ascertained by Hahn and the $18,675,000 value we have decided
today.8
We also reject Hahn’s assertion that his alternate “market”
approach to valuation guideline supports his adjusted balance
sheet approach. Initially, we find that his selection of
guideline companies is at least adequate. Most of them value
“traditional” visiting nurse companies, such as petitioners, and
thus Hahn avoids the problem of including home health care
agencies that offer more technical home health care services. He
has also included both publicly traded and privately held
companies in his survey, and he has included both companies that
have positive income and companies that reported losses. His
guideline companies also include those with a positive net worth
and companies that indicate a negative equity capital.
8 Hahn’s “best case” scenario indicates that the value of
the intangible assets represents 17.68 percent of the total
assets. In one of his recent articles, he presents a chart
showing the goodwill value of seven publicly traded home health
care companies. The lowest of these indicates a goodwill value
to total asset ratio of 22 percent, and the others indicate
values at 31 percent, 39 percent, 47 percent, 52 percent, and two
others at 56 percent. Hahn et al., “Home health Agency
Valuation: Opportunity Amid Chaos”, Intrinsic Value (Spring
1998).
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