-31-
transactions in companies that had sufficient similarity to
Kohler, Dr. Hakala found transactions he thought were comparable
and then applied the ratios he found in those transactions to
value the Kohler stock.
Once Dr. Hakala determined the values under the transaction
method and the guideline company method, Dr. Hakala decided to
weight the guideline company approach 80 percent and the
transaction method 20 percent. Dr. Hakala thought the guideline
company method was more reliable, and there were not very many
comparable transactions that could be used in the transaction
method.
After Dr. Hakala had weighted the values he found under each
approach, he averaged the approaches and considered whether a
discount for lack of marketability should be applied. He
concluded a 25-percent discount was appropriate.
Including his adjustment for his $11 million error, Dr.
Hakala determined that the Kohler stock held by the estate was
worth $156 million on the alternate valuation date.
11(...continued)
information and market prices of publicly traded comparable
companies and compares that financial information with financial
information of the corporation to be valued to project the price
that shares of the corporation to be valued would sell for if the
corporation to be valued were publicly traded. The transaction
method is similar to the guideline company method except that
comparable companies that have recently been acquired are
selected and the financial information is compared to the price
obtained in the transaction, rather than the market price.
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