Estate of Paul Mitchell, Deceased - Page 30




                                       - 30 -                                         
          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.                                     





Page:  Previous  12  13  14  15  16  17  18  19  20  21  22  23  24  25  26  27  28  29  30  31  Next

Last modified: May 25, 2011