-315-
At trial, respondent essentially conceded that NOLs might
have some potential, but speculative, value to an acquirer if the
acquisition were properly structured within the strictures of
section 382. We extrapolate from respondent’s concession that
the NOLs in SMHC likewise might have had some potential, but
speculative, value to an acquirer. The parties dispute, however,
Mr. Crawford’s valuation of the NOLs in SMHC.
In making his valuation conclusions, Mr. Crawford relied
exclusively upon his experience in corporate NOL transactions.
Mr. Crawford, however, has no specific background in valuation;
nothing in his testimony or report indicates that he is qualified
to value the NOLs in SMHC. Indeed, it appears that critical
elements of Mr. Crawford’s valuation, including his income
projections, his weighted average cost of capital, and his
discount rate, were lifted from Mr. Wagner’s expert report.
Further, although Mr. Crawford testified that his experience in
corporate NOL transactions involves valuations of NOLs, he failed
to explain whether he personally makes or reviews, or has any
substantial role in making or reviewing, those valuations. He
also failed to correlate his valuation methodology to his
purported experience in valuing NOLs and to explain whether he
makes, reviews, or relies upon valuations similar to the
valuation in his expert report. Although Mr. Crawford states
that he selected a 98- to 99-percent risk-related discount rate
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