- 18 -
discount to that value to arrive at the per-share value of the
interest in question.10
Respondent’s expert, Francis X. Burns, also considered three
approaches to value and concluded that Godfrey’s fair market
value on September 15, 1997, was $30,740,869. Mr. Burns
explained that the income, market, and net asset approaches are
used to value a business. Messrs. Burns and Dorman generally
agree about the three methodologies normally used to value a
closely held business.
For purposes of the income approach, Mr. Burns attempted to
normalize the historical earnings to reflect the expectations for
Godfrey’s future profits. He referred to the National Marine
Manufacturers Association’s compiled statistics. They reflected
that a general recession occurred during the years 1990 through
1994 and had a profound effect on the boating industry. From
this premise, Mr. Burns concluded that Godfrey’s 1990 through
1994 earnings “would likely understate the company’s expected
future earnings as of 1997.”
Mr. Burns calculated the 1997 normalized earnings at
$3,077,161. We note that Mr. Burns’s figure is only $8,454, or
less than 1 percent, different from Mr. Dorman’s $3,085,615
figure for 1997 normalized earnings. Because he concluded that
10 The amount of the discount to be applied is discussed
later in this opinion.
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