Charles T. McCord, Jr. and Mary S. McCord, Donors - Page 63

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          overlapping) concepts of “marketability” and “liquidity”.  Our              
          substitute percentage derives from a published study referenced             
          in his direct testimony (the Wruck study)30 which reported that,            
          on average, discounts observed in private placements of                     
          unregistered shares exceeded those observed in private placements           
          of registered shares (freely tradable in the public market) by              
          17.6 percentage points, which we round up to 18 percent.  The               
          theory, discussed in more detail infra in section V.D.4., is that           
          such additional discount represents, to some degree, pure                   
          illiquidity concerns, since a ready, public market is available             
          to owners of registered shares and unavailable to owners of                 
          restricted shares.                                                          
                    d.  Direct Real Estate Holdings                                   
               Respondent has instructed Dr. Bajaj to base his value                  
          conclusion regarding MIL’s direct real estate holdings on the 40-           
          percent minority interest discount factor for those assets                  
          appearing in the 1996 HFBE appraisal report.  On that basis, we             
          find that the minority interest discount factor for MIL’s direct            
          real estate holdings is 40 percent.                                         
                    e.  Oil and Gas Interests                                         
               Mr. Frazier assigns a 33.5-percent minority interest                   
          discount factor to MIL’s oil and gas interests.  Respondent has             


               30  Wruck, “Equity Ownership Concentration and Firm Value:             
          Evidence from Private Equity Financings,” 23 J. Fin. Econ. 3                
          (1989).                                                                     




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