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and debt levels relative to the guideline companies supported use
of the median multiples he used, and that Godfrey had generally
higher profitability and less debt than the guideline companies.
Ultimately, Mr. Burns did not rely on the market approach but
relied on his income approach value of $30,740,869, which was
based only on 1997 earnings.
Generally, we agree with Mr. Burns that an asset value
approach is inappropriate in valuing a long-established,
financially successful operating company. The estate argues that
it was customary for businesses in this industry to be acquired
for net asset value. In that regard, William J. Deputy, who was
the chief operating officer of Godfrey at the time of trial,
testified that he had been involved in entity purchases in the
boating industry where the business acquisition was for an amount
approximating net asset value. Those acquisitions by Godfrey,
however, involved companies that were financially troubled.
Considering Godfrey’s sustained financial success, the use of net
asset value to acquire financially troubled companies is not
analogous or helpful in the circumstances we consider.
In an attempt to minimize Godfrey’s financial success, the
estate argued that Godfrey did not have any intangible values
attributable to patents or workforce. Admitting that Godfrey had
engineering drawings and design formulas, the estate also
contended that competitors could easily copy the design and
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