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C.P.A. and senior vice president of finance at Century when it
purchased PMS. Ross, Transcr. at 1166. In 1974, Ross became
president of Century Corp. Id. at 1165. According to Ross, it
was customary in the industry to base the purchase price of a
service corporation such as PMS on a multiple of the firm’s
pretax income. Id. at 1172-1173.
Originally, PMS’s property management business was almost
all in Texas, principally Houston and Dallas. PMS typically
managed office buildings and other commercial real estate owned
by others under property management contracts on a month-to-month
basis. As of the time of PMS’s 1974 acquisition by Century,
although Prudential was perhaps PMS’s biggest customer, PMS
managed a relatively small number of Prudential’s commercial real
properties. Shortly after Century acquired PMS, Schnitzer
attempted to expand substantially the size of PMS’s property
management business, as PMS typically earned only a relatively
modest profit margin on its individual property management
contracts. Schnitzer felt that the only way to increase PMS’s
profits was having a large volume of such management contracts.
To that end, in 1974, Schnitzer approached Ballard (who
Schnitzer had previously dealt with in developing office
buildings in Houston, Texas) and offered to have Century give
Prudential a 50-percent stock interest in PMS. Although
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