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Mr. Grizzle also looked at the sales to third parties of 100
percent of the stock of three companies allegedly comparable to
BCC. One of the companies was sold twice, so Mr. Grizzle
examined four transactions in all. The companies Mr. Grizzle
considered included a company that constructed cellular telephone
towers, a company that installed natural gas compressors and
pipelines, and a management company that hired subcontractors to
build chemical and natural gas liquefaction plants. In each
case, he determined the company had sold for approximately four
times adjusted cashflow.
Mr. Grizzle did not contend that the sale prices of the
companies he examined were determined by using a multiple of
adjusted cashflow. Rather, he backed into the multiples after
the fact by comparing the sale prices to the adjusted cashflows.
He compared those multiples to the multiple of cashflow implicit
in the purchase price designated in the 1996 Agreement to
conclude that the price term was comparable to what unrelated
parties have negotiated at arm’s length.
On the basis of this analysis, Mr. Grizzle calculated BCC’s
fair market value, and the value of decedent’s shares, by
multiplying the weighted average of BCC’s adjusted cashflows over
the 5 fiscal years ended January 31, 1997, by four, weighting the
most recent year more heavily than the earliest one. Mr. Grizzle
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