- 26 -
this value, we considered all the evidence but gave the greatest
consideration to Minnetonka’s real-world $125 million offer in the
fall of 1988 (which Mr. DeJoria found “a little short”) and the
Gillette offer of $150 million. This value represents the
acquisition value of all the nonpublicly traded stock of JPMS.
In Estate of Mitchell v. Commissioner, 250 F.3d at 705, the
Court of Appeals stated:
Acquisition value and publicly traded value are different
because acquisition prices involve a premium for the
purchase of the entire company in one deal. Such a
lumpsum valuation was not taken into account when the
minority interest value of the stock was calculated by
the experts. In general, the acquisition price is
higher, resulting in an inflated tax consequence for the
Estate.
In reaching our valuation determination, we were, and are,
mindful that, in general, a publicly traded value (determined under
the comparable companies analysis) represents a minority,
marketable value. Moreover, we were, and are, mindful that
acquisition value, if determined by reference to acquisitions of
publicly traded companies, reflects a premium over the publicly
traded value. It produces a control, marketable value that is
greater than the minority, marketable publicly traded value. If
the acquisition price of publicly traded companies is used to value
a minority interest in a closely held corporation, discounts for
both lack of marketability and lack of control would apply.
The real-world acquisition value of $150 million we applied in
this case is the acquisition value based on an offer to purchase
Page: Previous 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 NextLast modified: May 25, 2011