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In determining BCC’s value, Mr. Grizzle relied solely on an
income-based approach. Mr. Fodor, the estate’s other expert,
asserted that 25 percent of BCC’s value should be determined
using an asset-based approach. Mr. Hitchner, respondent’s
expert, asserted that BCC’s value should be calculated by giving
significant weight to an asset-based approach. We are persuaded
by their testimony that some weight should be given to an asset
approach. BCC was an asset-rich company, with significantly more
cash than similar companies. Decedent’s shares represented a
controlling interest in the company, thus allowing a purchaser to
control the retention or disposition of those assets. Thus, Mr.
Grizzle’s reliance on an income-based approach alone, without
regard to the company’s assets, raises doubt about his valuation
judgments.
Even if we assume that an income-based approach alone were
appropriate here, Mr. Grizzle excluded nonoperating assets from
his valuation, on the theory that, in actual transactions,
sellers do not sell nonoperating assets along with the operating
assets. Thus, he envisioned decedent selling BCC’s operating
assets only, while retaining its nonoperating assets. The
purchase price set forth in the Modified 1981 Agreement, however,
was for decedent’s interest in BCC’s operating and nonoperating
assets. As discussed infra in Part II.C.3., BCC had
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