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share prices paid in private placements of restricted stock were
compared with the same company’s freely traded market price.
After considering those studies, Mr. Burns arrived at a 25-
percent discount to account for “the fact that an interest in
Godfrey * * * would likely not be able to be sold immediately.”
The estate’s expert, Mr. Dorman, reached the conclusion that
the 19.99-percent interest in Godfrey should be discounted by 44
percent to account for the minority interest and marketability
limitations. He calculated a discounted value of $1,941,000 by
dividing his $17,341,379 adjusted net asset value by 938 (the
number of Godfrey shares outstanding) to arrive at an $18,488-
per-share value. He then multiplied the per-share value by 187.5
(the number of shares being valued) to arrive at an undiscounted
value of $3,466,427. By applying the 44-percent discount
($1,525,228) for lack of marketability and the minority interest,
Mr. Dorman arrived at a discounted value of $1,941,199, which he
rounded to $1,941,000.
Mr. Dorman’s combined 44-percent minority interest and lack
of marketability discount was derived by use of a matrix table
devised by his company. The table is divided into six rating
factors, which Mr. Dorman believes “replicate an investor’s
decision process.” The table has values (amounts of percentage
discount) assigned to each of five categories (descending from
good to poor) for each of the six factors. The matrix also has
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