Estate of Lewis A. Bailey, Deceased, Frances Jeanette Foster, Executrix - Page 30

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               In his report, Smith also identified a number of other                 
          factors (apart from tax on built-in gains and stock sale costs)             
          that he says are normally considered in calculating a                       
          marketability discount.  For various reasons, however, he                   
          assigned no weight to any of these other factors.  For instance,            
          he assigned no weight to management continuity, because he                  
          believed that C&L Bailey was merely a “holding company”.  For a             
          contrary viewpoint, we need look no further than Smith’s own                
          report.  In the section of his report captioned “Company                    
          Background”, Smith stated that C&L Bailey was founded for “the              
          primary purpose of owning and operating motel properties” and               
          that decedent’s grown children managed the motels.  Similarly, in           
          the “Financial Analysis” section of his report, Smith stated that           
          C&L Bailey “owns and operates two motels”.  From his report, we             
          infer that Smith believes that management continuity would                  
          support an additional amount of marketability discount if C&L               
          Bailey were considered to be an operating company.  As just                 
          noted, Smith’s own report (although internally inconsistent in              
          this regard), as well as the evidence in the record, fairly                 
          supports a conclusion that C&L Bailey was in fact an operating              
          company.  Hence, Smith’s own report supports a conclusion that              
          his recommended marketability discount is understated insofar as            
          it disregards continuity of management.                                     

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