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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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