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significantly below our appraisal value which is a factor that
would increase the lack of marketability discount.”
In sum, we believe that Mr. Schroeder’s consideration of the
potential loan impairment, the pending bankruptcy, and the prior
transactions cause his recommended lack of marketability discount
to be overstated. The remaining factors that he identified in
his report support a lower lack of marketability discount.
b. Respondent’s Expert
In determining an appropriate lack of marketability
discount, Mr. Herber relied on restricted stock studies
indicating median discounts ranging from 24 to 45 percent, with
median results from most of the studies trending in a narrow
range from 30 to 35 percent. Mr. Herber placed considerable
reliance on a Management Planning, Inc. study, which “indicates
that a discount ranged overall from 26.2% to 32.7% with a central
tendency of 30.5% overall”. Mr. Herber suggested that RBI’s
relatively smaller gross income and earnings supported a greater
discount, but that “the overriding relative stability of the
companies earnings would contribute to a lower applicable lack of
marketability discount”. He also indicated that the companies in
the studies tended not to pay dividends. Thus, in Mr. Herber’s
view, the fact that RBI paid dividends would support a lower
discount. Mr. Herber concluded that these factors together
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