-38-
Mr. Grabowski used the income approach and the market
approach to value the Kohler stock. Under the income approach,
Mr. Grabowski used the DCF method, the discounted dividend
method, and the adjusted discounted dividend method. Mr.
Grabowski used the management plan to perform these analyses
because he considered it the most accurate estimate of the future
performance of the company.
Under the market approach, Mr. Grabowski used the guideline
publicly traded company method. He identified publicly traded
companies in each market segment in which Kohler operated and
applied valuation multiples to these entities to estimate the
value of each Kohler market segment. He then weighted the
valuation conclusion as to each segment of the business based on
the relative portion of Kohler’s business that the segment
comprised. Mr. Grabowski did not use the cost approach because
Kohler was a growing and profitable business that was likely
worth more than the values of its assets.
Mr. Grabowski then considered each of the values he had
determined and found that they all resulted in values fairly
close to each other. He assessed the strengths and weaknesses of
each method and ultimately decided that the adjusted discounted
dividend method was the most appropriate method because it
reflected the actual cash flows a shareholder could expect to
receive. The adjusted discounted dividend method also reflected
Page: Previous 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 NextLast modified: May 25, 2011