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approximately $1.9 million of nonoperating assets (ignoring
insurance proceeds the company was due to receive on decedent’s
death). Had Mr. Grizzle valued all of BCC’s assets, and not just
the operating assets, he would have valued BCC at over $6
million, as opposed to the $4.5 million value he calculated using
a multiple of four times adjusted cashflow. With this adjustment
alone, Mr. Grizzle’s estimation of the fair market value of
decedent’s shares would rise from approximately $3.8 million to
over $5 million, thus undermining any claim that the $4 million
purchase price in the Modified 1981 Agreement was a fair market
value price.28
In light of these concerns, we assign no weight to Mr.
Grizzle’s testimony that the $4 million purchase price set forth
28 In addition, we are unpersuaded regarding Mr. Grizzle’s
estimation of BCC’s fair market value because his purportedly
comparable companies differed significantly from BCC. For
instance, the cellular tower construction company he used as a
comparable was 2 years old with minimal cash and assets. It was
in a new industry that was rapidly evolving. Moreover, it
depended on three customers for 86 percent of its contract
revenues, with one customer accounting for 48 percent of those
revenues. This is a far cry from BCC, which had been in business
for more than 50 years, operated in a stable industry, obtained
business from numerous sources, and had significant cash and
assets. In two cases, Mr. Grizzle relied on financial data
generated after the companies were sold to determine the cashflow
multiple implicit in the sale prices. In each case, the use of
this data served to decrease the multiple he determined. Thus,
we are not persuaded by Mr. Grizzle’s conclusion that BCC should
be valued using the same multiple of cashflow reflected in the
sales of these companies or that the multiples he derived are
accurate.
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