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a firm’s value * * *. [Damodaran, Damodaran on Valuation 16
(1994).]
and further:
Since the selection of comparable firms has such a
paramount role in valuation with multiples, special
attention must be paid to selecting a true comparable
sample of firms -- firms that are in the same industry,
employ the same technology, apply to similar
clienteles, are of similar size, and so on. * * *
[Benninga & Sarig, Corporate Finance A Valuation
Approach 330 (1997).]
We reject respondent’s expert’s 11 companies as comparable
to TPC. See Estate of Clarke v. Commissioner, T.C. Memo. 1976-
328, where we rejected public companies as comparable,
explaining as follows:
the fact that two companies are both part of the same
general industry does not, as respondent’s expert
implies, make them comparable per se. Such a standard
clearly ignores the interplay of the myriad of complex
factors and features that must be accounted for in any
meaningful comparison. Rather we think it imperative
that the characteristics of the subject company and the
purportedly comparable company relevant to the question
of value be isolated and examined so that a significant
comparison can be made. Those factors include the
respective products, market, management, earnings,
dividend paying capacity, book value, and position in
the industry of each company. See Cent. Trust Co. v.
United States, 305 F.2d 393 (Ct. Cl. 1962). [Emphasis
added.]
Also, we reject respondent’s expert’s discounted cashflow
analysis. As explained, significant errors were made therein,
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