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selected appropriate multiples for RBI stock. Mr. Herber
determined a value of $28,500,000 for RBI stock using the
transaction analysis. In reaching his conclusions, Mr. Herber,
unlike Mr. Schroeder, did not consider the effects of any
potential loan impairment.
iii. Effect of Potential Loan Impairment
In their disagreement over the experts’ transaction
analyses, the parties focus on whether the multiples that the
experts selected should reflect the impairment risk of the loan
to the Havrillas and the pending bankruptcy of Jefferson/Keeler.8
Although Mr. Schroeder considered the potential of a loan
impairment in his report, it is unclear whether or to what extent
it depressed his appraisal.9 Accordingly, we are unpersuaded
that Mr. Herber’s failure to consider the potential loan
impairment materially undermines his valuation recommendations.
8 The difference in the values that the estate’s expert,
Gary L. Schroeder, and respondent’s expert, William C. Herber,
determined is not solely attributable to differing treatments of
the potential loan impairment. The experts also relied upon
different guideline transactions, which resulted in the use of
different price/earnings, price/equity, and price/assets ratios.
Respondent, however, raises no issues as to the remaining aspects
of Mr. Schroeder’s transaction analysis, including his selection
of guideline transactions. Similarly, the estate does not appear
to dispute the remaining aspects of Mr. Herber’s transaction
analysis.
9 Furthermore, the record reflects that Mr. Schroeder’s
knowledge and understanding of the circumstances of the loan
impairment were, in key respects, faulty.
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