Estate of Richie C. Heck, Deceased , Gary Heck, Special Administrator - Page 40




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          of control problem.14  Thus, we view Drs. Bajaj and Spiro in                
          basic agreement as regards the need for a discount for lack of              
          control, which we view as a minority status discount.                       
                    (2)  Discount for Brown-Forman’s ROFR                             
               Both experts agree that some discount for the ROFR is                  
          warranted.  Dr. Spiro includes the ROFR as part of his basic                
          15-percent liquidity discount, Dr. Bajaj as part of his                     
          additional 10-percent discount for both the ROFR and the minority           
          interest’s lack of control.                                                 
               Dr. Bajaj views the ROFR as a much more serious impediment             
          to marketability than does Dr. Spiro.  He argues that, because of           
          its ROFR, Brown-Forman is always a potential bidder for an                  
          available block of Korbel stock.  He further argues that, because           
          it had been the sole distributor of Korbel champagne and brandy             
          for a number of years, Brown-Forman knows more about Korbel than            
          any potential outside bidder.  As a result, any other outside               
          bidder would have to expend a great deal of effort and money to             
          even approach Brown-Forman’s knowledge level concerning Korbel,             
          without which it may offer too little and risk losing out to                
          Brown-Forman, or too much and risk making a bad deal.  Also,                
          because Brown-Forman has a special interest in retaining its sole           

               14  Dr. Spiro also states that, as an S corporation, Korbel            
          is subject to several restrictions impairing liquidity, including           
          restrictions on the number and type of persons that can be                  
          shareholders.  Nevertheless, he views S corporation status as a             
          benefit and fails to quantify the relevant advantages and                   
          disadvantages.                                                              




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