Charles T. McCord, Jr. and Mary S. McCord, Donors - Page 70

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          the gifted interest as a 1-percent interest in MIL.36  In light             
          of those numerous defects, we give little weight to Mr. Frazier’s           
          restricted stock analysis.                                                  
                    4.  Dr. Bajaj’s Private Placement Analysis                        
                    a.  Comparison of Registered and Unregistered Private             
                         Placements                                                   
               Dr. Bajaj believes that the discounts observed in restricted           
          stock studies are attributable in part to factors other than                
          impaired marketability.37  In support of his position, Dr. Bajaj            
          analyzes data from studies (including his own unpublished                   
          study)38 involving both registered private placements and                   
          unregistered private placements (the private placement studies).            
          He observes that, if discounts found in unregistered (restricted)           
          private placements are attributable solely to impaired                      
          marketability, then there should be no discounts associated with            


               36  Specifically, one restricted stock study, the Silber               
          study, found that the average dollar size of private placements             
          with discounts in excess of 35 percent was $2.7 million, while              
          the average dollar size of private placements with discounts less           
          than 35 percent was $5.8 million.  Even taking into account Mr.             
          Frazier’s suggested minority interest discount of 22 percent, the           
          “dollar size” of each half of the gifted interest was                       
          approximately $5.7 million.  That would indicate that, based on             
          the Silber study, a discount of less than 35 percent would be               
          appropriate for each half of the gifted interest.                           
               37  We note that such other factors should not include the             
          purchaser’s minority ownership position, if applicable;                     
          presumably, a minority interest discount is already reflected in            
          the market price of a share of the issuer.                                  
               38  Other than his own study, he refers to the Wruck study,            
          supra note 30, and the Hertzel & Smith study, supra note 34.                




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