Estate of Frazier Jelke III, Deceased, Wachovia Bank, N.A., f.k.a. First Union National Bank, Personal Representative - Page 32

                                        - 32 -                                        
          control, making a lack-of-control discount less significant.  In            
          that regard, Mr. Shaked noted that the beneficial owners of the             
          shares of CCC were not managers of CCC or members of its board of           
          directors.                                                                  
               Both experts agreed that there was an inverse relationship             
          between a company’s financial performance and a lack-of-control             
          discount.  In other words, as performance improves the discount             
          decreases.  The parties, however, disagree about CCC’s                      
          performance.  Respondent argues that CCC outperforms many of the            
          15 comparables used by Mr. Frazier, if considered over a 3-, 5-             
          and 10-year period.  Conversely, the estate, for the same period,           
          argues that CCC has underperformed the S&P 500 and most of the              
          final seven comparables selected by Mr. Frazier.  We believe that           
          CCC has a good performance record.  Accordingly, we agree to some           
          extent with Mr. Shaked’s observation that control would be less             
          important for CCC.                                                          
               Mr. Shaked, in support of his 5-percent discount for lack of           
          control, provided the generalized explanation that CCC was                  
          similar to a closed-end holding company.  Mr. Frazier provided              
          more detail and analysis in support of his 25-percent discount              
          for lack of control, but some of his analysis overlooks important           
          aspects and, to some extent, is inconsistent.                               
               First, Mr. Frazier’s reasoning in using some of the                    
          comparables is flawed.  He did not provide adequate justification           
          for eliminating Tri-Continental and Adams Express as comparables.           
          In addition, he ignored the fact that Royce Micro Cap and Morgan            





Page:  Previous  22  23  24  25  26  27  28  29  30  31  32  33  34  35  36  37  38  39  40  41  Next

Last modified: May 25, 2011