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damages practice, of LECG, Inc. Dr. Bajaj has experience as a
university professor of finance and business economics, he has
lectured on valuation issues, and he has performed business
valuations for purposes of litigation. The Court accepted
Dr. Bajaj as an expert in the valuation of closely held companies
and received his written reports into evidence as his direct and
rebuttal testimony, respectively. In his direct testimony,
Dr. Bajaj reached the conclusion that the aggregate fair market
value of the shares as of the valuation date was $18,707,000, or
$29,694 a share.
Dr. Bajaj rejected the market approach and relied
exclusively upon a discounted cashflow analysis. He rejected the
market approach on the ground that there were no publicly traded
companies that were comparable to Korbel.
Dr. Bajaj’s discounted cashflow analysis resulted in a net
operating asset value for Korbel of $72,041,711. To that amount
he (like Dr. Spiro) added an additional amount for nonoperating
assets: $5,517,000, consisting of $2,198,000 for the excess
land, $1,110,000 representing the proceeds from insurance
policies on decedent’s life, and $2,209,000 for the note
receivable from KFTY. He then subtracted $4,918,000 of interest-
bearing debt, resulting in a fair market value for Korbel as of
the valuation date of $72,640,711.
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Last modified: May 25, 2011