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value for the 187.5 shares in Godfrey, he considered the
investment quite large and therefore assigned six discount points
to this aspect. We view this aspect as one of the considerations
associated with the risk factor in investing in a minority
interest in a closely held family corporation. It would be
reasonable to assess six discount points for this factor.
The third category concerns Godfrey’s financial outlook,
management, and growth potential, and the scale is another
arithmetic progression by 2. However, it starts with 2 and
proceeds to 10 discount points. Here Mr. Dorman indicates that
Godfrey has had some sales fluctuation, but that operating
expenses have shown continuous and steady decline, and that the
short-term financial information indicates an improving trend.
The record here reflects a much more positive picture of
Godfrey’s financial record and prospects. Accordingly, we
consider Mr. Dorman’s evaluation to be too conservative.
From another perspective, the financial outlook category
should ostensibly be addressing the potential for return on
invested capital. In that regard, the sixth category of the
matrix more directly addresses that aspect and assigns as much as
14 discount points for that aspect. The third category appears,
in that respect, to be a duplication. Mr. Dorman has given an
“above average” rating, assigning 4 discount points to the third
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