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of 15 percent is appropriate in determining the fair market value
of each gifted partnership interest.
D. Marketability Discount
The experts agree that private placements of publicly traded
stock are an appropriate starting place for determining a
marketability discount here. The experts disagree on the
appropriate private placements to be considered and what is
measured by those comparisons. The experts also disagree on the
inferences to be drawn from the partnership’s specific
characteristics.
1. Empirical Analysis
a. Petitioner’s Expert
Mr. Oliver compared private-market prices of unregistered
(restricted) shares in public corporations with the public-market
prices of unrestricted but otherwise identical shares in the same
corporations.21 He attributes the price difference to the
restricted shares’ lack of marketability.
More particularly, starting with a preexisting MPI study
analyzing 197 private transactions in common stocks of actively
traded corporations from 1980 through 1995, Mr. Oliver identified
a guideline group of 39 transactions in unregistered (restricted)
21 Restricted shares, because they have not been registered
with the SEC, generally cannot be sold in the public market for a
2-year period. See 17 C.F.R. sec. 230.144(d)(1) (1996). In 1997
the required holding period was shortened to 1 year. See 62 Fed.
Reg. 9242 (Feb. 28, 1997).
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