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the company subject to valuation, were the two leaders in the
greeting card industry. The Commissioner’s expert concluded that
American Greetings “was the only reasonably comparable company to
Hallmark because it had a similar product mix and capital
structure and served the same markets.” Id. at 331. We rejected
the valuation report submitted by the Commissioner’s expert in
light of his reliance on a single comparable company in employing
the market approach. In so doing, we observed that “[a]ny one
company may have unique individual characteristics that may
distort the comparison.” Id. at 340. A sample of one tells us
little about what is normal for the population in question.5
Dr. Spiro has failed to convince us of the reliability of his
guideline analysis.
Even if we were to accept that Dr. Spiro relied on both
Canandaigua and Mondavi as guideline companies, as respondent
argues, we would still reject Dr. Spiro’s use of the market
approach in this case. Respondent points out that we have
approved the use of the market approach based upon as few as two
guideline companies. See Estate of Desmond v. Commissioner, T.C.
Memo. 1999-76. But in that case, all three companies were in the
same, and not just a similar, line of business (manufacture and
5 In his rebuttal report, Dr. Bajaj states: “The superior
quality of Mondavi’s wines, its innovative packaging [a new
bottle with a flange top that prevented dripping and used a dot
of wax instead of a foil capsule as a seal] and strong
advertising coupled with its reputation as an environment-
friendly producer * * * [were attributes that] were largely
unique to * * * [Mondavi]”. (Fn. ref. omitted.) Respondent does
not challenge Dr. Bajaj on that point, which point indicates that
Mondavi may not be reflective of the norm.
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