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reflect the additional lack of marketability attributable to a
minority interest.
On the basis of a thorough review of the entire record before
us, we believe that we correctly arrived at a 35-percent discount
rate that combines the lack of control and any additional lack of
marketability attributable to that lack of control that is not
reflected in the $150 million control, nonmarketable acquisition
value.
The experts generally agreed that the most significant factors
included the impact of Mr. Mitchell’s death on the reputation of
the company, the costs of the DeJoria litigation, cashflow
patterns, the marketability of the estate’s minority (i.e.
noncontrolling) interest of stock in the company, and the overall
competition in the hair care industry. The $150 million
acquisition price reflects the cashflow patterns and the overall
competition in the hair care industry. We apply a 10-percent
discount to the $150 million to reflect the impact of Mr.
Mitchell’s death on the value of the corporation.4 We apply a 35-
percent discount for lack of control and additional lack of
marketability attributable to the minority interest. Finally, we
reduce the value of the 49.04-percent ownership interest by
$1,500,000 to account for the possibility of litigation with Mr.
4 This 10-percent discount is consistent with Mr.
Weiksner’s extraordinary risk discount.
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