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going public; (2) the absence of sales of TPC stock for the
10 years prior to May 2, 1998; (3) the inability of any
stockholder of TPC to obtain control of TPC by purchasing merely
the estate’s 20-percent interest; and (4) the inability of the
holder of the estate’s block of TPC stock to force a liquidation
of TPC.
The estate’s experts, however, provided no credible
explanation for why they used 40-percent and 45-percent minority
interest and lack of marketability discounts, as distinguished
from some other numbers –– e.g., 20 percent or 30 percent.
Respondent’s Valuation
Respondent’s expert estimated a date-of-death fair market
value for TPC of $225 million and a date-of-death fair market
value for the estate’s 20-percent TPC stock interest of $32.4
million. Respondent’s expert utilized two valuation methods to
value TPC -- the comparable public company method and the
discounted cashflow method. In his revised report, in the
process of making certain corrections to errors made in his
original report, respondent’s expert made significant
questionable adjustments in his discounted cashflow method that
are inconsistent with the methodology utilized in his original
report. In his original and revised reports respondent’s expert
did not utilize the capitalization of income method.
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