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Enterprise Value
DeJoria Comparable Discounted
Expert Compensation Companies Cashflow
Hanan $2.5 $302 $227
Hanan 5.0 272 (267-281) 218
Hanan 12.0-17.0 193 155
Weiksner 12.0-17.0 85-105 115-140
McGraw 12.0-17.0 109 101
Under their comparable companies analyses, Messrs. Weiksner
and McGraw applied a 45-percent discount to reflect lack of
marketability. Mr. McGraw also applied the 45-percent lack of
marketability discount in his discounted cashflow analysis; he did
not apply a minority interest discount or assert that the value
reflected a premium for control. Mr. Weiksner opined that his
discounted cashflow analysis produced a control value that
demonstrated a 34-percent control premium over the comparable
companies value and confirmed his valuation under the comparable
companies analysis. Mr. Hanan applied a 30-percent discount for
lack of marketability from the value determined under both his
comparable companies approach and his discounted cashflow analysis.
Mr. Weiksner applied a 10-percent extraordinary risk discount
to JPMS’s comparable companies value. This discount accounted for:
(1) The approximate cost of replacing Mr. Mitchell’s services that
was estimated in the projections of JPMS’s operating expenses; (2)
operational difficulties; (3) dependence on Mr. DeJoria; and (4)
difficulty in maintaining future growth.
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