Estate of Webster E. Kelley, Deceased, John R. Louden and Patricia L. Louden, Personal Representatives - Page 17

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                         b.  Respondent’s Expert                                      
               Using the private placement approach, Dr. Widmer determined            
          a 15-percent discount for lack of marketability on the basis of a           
          study by Dr. Mukesh Bajaj, Bajaj, et al., “Firm Value and                   
          Marketability Discounts”, 27 J. Corp. L. 89 (2001), which found             
          that the private placement of unregistered shares has an average            
          discount of about 14.09 percent higher than the average discount            
          on registered placements.  Dr. Widmer also based this discount on           
          the low risk of the partnership’s portfolio.                                
                    3.  Conclusion                                                    
               We are not persuaded by ATI’s recommendation of a 38-percent           
          marketability discount as the restricted stock studies referred             
          to in ATI’s expert report examine mostly operating companies, and           
          there are fundamental differences between an investment company             
          holding easily valued and liquid assets (cash and certificates of           
          deposit), such as KLLP, and operating companies.  See Peracchio             
          v. Commissioner, supra.  Moreover, ATI did not analyze the data             
          from these studies as they related to the transferred interests             
          herein, and therefore we cannot accept the premise that this                
          average discount is appropriate.  See id.                                   
               We are also not persuaded by Dr. Widmer’s recommendation of            
          a 15-percent marketability discount.  While we agree that the               
          Bajaj study is an appropriate tool in determining the lack of               
          marketability discount, Dr. Widmer’s conclusion based on the                






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