-39-
the remote possibility that Kohler would be sold or undergo an
initial public offering. The closeness of the values determined
by the other methods acted as a check that this value was
correct. He also reconciled his conclusion to prior sales of
Kohler stock to confirm the reasonableness of the analysis.
Mr. Grabowski then made adjustments to the value determined
under the adjusted discounted dividend method to reflect that
Kohler was closely held and the number of shares of stock the
estate owned. Mr. Grabowski settled on a 35-percent discount for
lack of marketability. He determined this discount was correct
by considering studies of restricted stock and the stock of other
companies similar to Kohler. He found that the restricted stock
studies did not give the full picture of the appropriate
marketability discount because the studies involved only
companies that eventually went public and therefore their shares
eventually became marketable. Mr. Grabowski concluded an
eventual public offering was not likely with Kohler and therefore
determined that a slightly higher discount was appropriate.
Mr. Grabowski determined that a 25-percent adjustment for
lack of control was warranted only in considering the value of
the Hospitality group and in considering the price paid to
dissenting shareholders in the reorganization. In making the
25-percent adjustment, he considered factors such as the Kohler
family’s stated intention to control the company long term,
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