DocketNumber： No. 11811-01
Citation Numbers： 86 T.C.M. 333, 2003 Tax Ct. Memo LEXIS 257, 2003 T.C. Memo. 258
Judges： "Thornton, Michael B."
Filed Date： 9/3/2003
Status： Non-Precedential
Modified Date： 11/21/2020
2003 Tax Ct. Memo LEXIS 257">*257 Values subject to gift tax determined.
J. A. Cragwall, Jr., Norbert F. Kugele, and Dean F. Pacific for petitioner.
MEMORANDUM FINDINGS OF FACT AND OPINION
THORNTON, Judge: Respondent determined a $ 998,508 deficiency in petitioner's 1996 Federal gift tax. The issue for decision is the fair market value of interests in a family limited partnership that petitioner transferred in 1996.
Unless otherwise indicated, all section references are to the Internal Revenue Code as amended, and all Rule references are to the Tax Court Rules of Practice and Procedure.
FINDINGS OF FACT
The parties have stipulated many of the facts, which we incorporate by this reference. When petitioner filed her petition, she resided in Fruitport, Michigan.
On October 20, 1995, petitioner and her daughter, Clarajane Middlecamp (Clarajane), formed, pursuant to Georgia law, the Lappo Family Limited Partnership (the partnership). On April 19, 1996, petitioner and Clarajane conveyed to it a portfolio of marketable2003 Tax Ct. Memo LEXIS 257">*258 securities (principally municipal bonds) and certain parcels of Michigan real estate that were subject to a long-term lease. General Limited Partnership Partnership Partner Interest Interest Total Petitioner 1.0 98.7 99.7 Clarajane .2 .1 .3 Total 1.2 98.8 100.0
The allocation of initial partnership interests was based on the December 31, 1995, market value2003 Tax Ct. Memo LEXIS 257">*259 of the assets contributed to the partnership. The appraised market value of the real estate was $ 1,860,000. The market value of the securities was $ 1,318,609.
1. The April 19, 1996, Gifts
On April 19, 1996, petitioner transferred a 69.4815368- percent limited partnership interest, representing the following gifts: a 66.80917-percent limited partnership interest to Clarajane as Trustee of the Lappo Generation Trust; and a 0.6680917-percent interest to each of her four grandchildren, Seth R. Middlecamp, Lisa Middlecamp-Silky, Wendy Thomas, and Alyson Middlecamp.
2. The July 2, 1996, Gift
On July 2, 1996, petitioner gave her remaining 29.2184632- percent limited partnership interest to Clarajane in her individual capacity.
Consequently, after these gifts, the partnership interests were as follows: 2003 Tax Ct. Memo LEXIS 257">*260
| General | Limited | ||
| Partnership | Partnership | ||
| Partner | Interest | Interest | Total |
| Petitioner | 1.0 | -- | 1.0000000 |
| Clarajane | .2 | 29.3184632 | 29.5184632 |
| Lappo Generation | |||
| Trust | -- | 66.8091700 | 66.8091700 |
| Seth R. | |||
| Middlecamp | -- | .6680917 | .6680917 |
| Lisa Middlecamp- | |||
| Silky | -- | .6680917 | .6680917 |
| Wendt Thomas | -- | .6680917 | .6680917 |
| Alyson Middlecamp | -- | .6690817 | .6680917 |
| Total | 1.2 | 98.8 | 100.0 |
Under the partnership agreement, the general partners have exclusive authority to manage the operations and affairs of the partnership and to make all decisions regarding its business, including the distribution of cash. No partner can: (a) Withdraw any part of her capital or receive any distributions from the partnership except as provided for in the partnership agreement; (b) demand or receive any assets other than cash in return for her capital interest; or (c) be paid interest on any capital contributed to or accumulated in the partnership. Withdrawal of a general partner will cause dissolution of the partnership unless there is at least one other general partner to carry on the partnership's2003 Tax Ct. Memo LEXIS 257">*261 business or unless all remaining partners agree to continue the partnership and to appoint one or more general partners.
In general, the limited partners have no rights to participate in managing or controlling the partnership's business. A limited partner may assign his or her interest, but such assignment will not dissolve the partnership or entitle the assignee to become a partner or to exercise any rights as a partner (unless the general partners give their prior consent); rather, the assignee will be entitled only to receive distributions to which the assignor would have been entitled.
Under the partnership agreement, the partnership may purchase all, but not less than all, of a limited partner's interest upon the limited partner's death or upon any transfer of the limited partner's interest by operation of law. The purchase price will be the fair market value as agreed upon by the limited partner and the partnership or else as determined by appraisal.
If a limited partner undertakes to sell his or her interest, the partnership has the right of first refusal. If the partnership elects to buy the limited partner's entire interest, the price to be paid will be the price set forth2003 Tax Ct. Memo LEXIS 257">*262 in the selling partner's original proposal, less 15 percent.
The partnership is to continue until December 31, 2045, unless it is dissolved sooner by consent of all the partners, by the withdrawal of a general partner (in the absence of another general partner to carry on the partnership's business), or by entry of a decree of judicial dissolution.
On April 11, 1997, petitioner filed a Federal gift tax return, reporting her April 19, 1996, gifts of limited partnership interests, which she valued at $ 1,040,000. With this return she remitted $ 153,000 of reported gift tax liability. On February 6, 1998, petitioner filed an amended Federal gift tax return, reporting her July 2, 1996, gift to Clarajane of a 29.218462-percent limited partnership interest which had been omitted from her original 1996 gift tax return. Petitioner valued the July 2, 1996, gift at $ 423,871 and remitted an additional $ 177,265 of gift taxes.
In the notice of deficiency, issued June 19, 2001, respondent determined that petitioner's 1996 gifts of partnership interests should be increased from the originally reported $ 1,040,000 to $ 3,137,287, resulting2003 Tax Ct. Memo LEXIS 257">*263 in a $ 998,508 gift tax deficiency as determined by reference to petitioner's originally filed gift tax return. 2003 Tax Ct. Memo LEXIS 257">*264 generally agree that these fair market values should be determined by reference to the net asset values (NAVs) of the partnership's assets (i.e., its real estate holdings and marketable securities portfolio), reduced by minority interest and marketability discounts. The parties agree on the NAVs of the partnership's assets. In support of their positions, each party relies on an expert opinion. We evaluate expert opinions in light of all the evidence in the record and may accept or reject expert testimony, in whole or in part, according to our own judgment. 1. Petitioner's Expert Petitioner's expert, Robert P. Oliver (Mr. Oliver), is an accredited appraiser who has been with Management Planning, Inc. (MPI), since 1975 and has served as its president since 1996. MPI has been in the business of preparing financial analyses of closely held businesses and in evaluating securities of such businesses since 1939. Mr. Oliver is an author and speaker on valuation and related topics. In2003 Tax Ct. Memo LEXIS 257">*266 his direct testimony, Mr. Oliver concluded that a 7.5- percent minority interest discount is appropriate with respect to the marketable securities component of the partnership interests. With respect to the real estate component, he concluded that a 35-percent minority interest discount should apply to petitioner's April 19, 1996, gifts, and a 30-percent minority interest discount to her July 2, 1996, gift. In addition, Mr. Oliver concluded that there should be a 35-percent marketability discount for each gift. 2. Respondent's Expert Respondent's expert, Dr. Alan C. Shapiro (Dr. Shapiro), is the Ivadelle and Theodore Johnson Professor of Banking and Finance and past chairman of the Department of Finance and Business Economics, Marshall School of Business, University of Southern California (USC). He is also an outside director of LECG, LLC, an economic and financial consulting company. Prior to joining USC in 1978, he taught at the Wharton School of Business at the University of Pennsylvania and has been a visiting professor at Yale, the University of California at Los Angeles, the University of British Columbia, and the Stockholm School of Economics. He is the author of numerous2003 Tax Ct. Memo LEXIS 257">*267 academic articles and books on corporate finance. In his direct testimony, Dr. Shapiro concluded that the partnership interests should be valued to reflect an 8.5-percent minority interest discount and an 8.3-percent marketability discount. In estimating the fair market value of a noncontrolling interest in a closely held business entity, it may be appropriate to decrease NAV to reflect lack of control inherent in the interest. See, e.g., 1. Marketable Securities As previously indicated, with respect to the marketable securities component of the partnership interests, petitioner's expert recommends a 7.5-percent minority interest discount, whereas respondent's expert recommends an 8.5-percent minority interest discount. The parties agree that the difference is not significant. At trial, petitioner agreed to use respondent's slightly higher net asset values for the marketable securities. Out of fairness to petitioner, we also use Dr. Shapiro's slightly higher 8.5-percent minority interest discount rate. 2. Real Estate a. Selection of Guideline Companies Both experts agree that2003 Tax Ct. Memo LEXIS 257">*268 publicly traded real estate investment trusts (REITs) provide an appropriate starting point for determining the minority interest discount with regard to the partnership's real estate holdings. They disagree, however, on which REITs should be used for comparison and on the analysis of the REITs data. i. Petitioner's Expert To select his guideline companies, Mr. Oliver started with over 400 REITs and real estate companies listed in Moody's Bank and Finance Manual. From this initial group of over 400, he eliminated all but seven companies (three REITS and four real estate companies) as being insufficiently comparable to the partnership. 2003 Tax Ct. Memo LEXIS 257">*269 We are not persuaded that Mr. Oliver's guideline group is sufficiently large or made up of companies sufficiently comparable to the partnership. "While we have utilized small samples in other valuation contexts, we have also recognized the basic premise that '[a] s similarity to the company to be valued decreases, the number of required comparables increases'." Dr. Shapiro started with the "core coverage group" of 62 real estate companies as reported by Green Street Advisors, Inc. (Green Street). 2003 Tax Ct. Memo LEXIS 257">*271 Petitioner complains that Dr. Shapiro's guideline group is inappropriate because Green Street derived NAVs using a valuation method different from that used to value the partnership's real estate. The valuation method used by Green Street, however, appears similar to that used to value the partnership's real estate. 2003 Tax Ct. Memo LEXIS 257">*272 b. Price-to-NAV Discounts i. Petitioner's Expert To determine the NAVs of his seven guideline companies, Mr. Oliver reviewed their reported book values and then made what his expert report tersely describes as "certain adjustments" to adjust these book values upward to reflect "appraised values disclosed by management." Comparing these NAVs to quoted share prices, Mr. Oliver concluded that the median price-to-NAV discount for the guideline companies was 29.3 percent on April 19, 1996, and 20.3 percent on July 2, 1996. Mr. Oliver then considered a number of factors that he said differentiated the partnership from his seven guideline companies. On the one hand, he concluded, the partnership had a "much stronger" financial position than the guideline companies, which would indicate a relatively smaller price-to-NAV discount for the partnership interests. On the other hand, he concluded, certain factors augured for a deeper price-to-NAV discount: The partnership had "very small" real estate holdings compared to the guideline companies; it was dependent on just one primary tenant; and as a newly formed entity, it lacked a track record of operations. The net effect of such factors, Mr. 2003 Tax Ct. Memo LEXIS 257">*273 Oliver concluded, was that a minority interest investor would value the partnership's real estate component at a deeper discount than the guideline median price-to-NAV discount. In the final analysis, he concluded that the appropriate minority interest discount was 35 percent for petitioner's April 19, 1996, gifts of partnership interests and 30 percent for petitioner's July 2, 1996, gift. Mr. Oliver has inadequately explained how he derived the NAVs that are critical to his computation of the price-to-NAV discounts. The record does not adequately reflect the management disclosures that led to Mr. Oliver's upward adjustments of the companies' reported book values, with a directly corresponding upward effect on his price-to-NAV discount computations. 2003 Tax Ct. Memo LEXIS 257">*274 Moreover, we are unconvinced of the appropriateness of the upward adjustments Mr. Oliver made to this volatile guideline company data to account for factors specific to the partnership. He does not explain how he quantified each factor, how the factors were netted, or why the net effect should result in an upward adjustment to the median guideline company discounts, rather than a downward adjustment or a wash. 2003 Tax Ct. Memo LEXIS 257">*275 Mr. Oliver opined that the reasonableness of his recommended minority interest discounts was confirmed by reference to the average 36-percent price-to-NAV discount that he calculated for a select group of 14 publicly registered, nonpublicly traded real estate limited partnerships (RELPs). 2003 Tax Ct. Memo LEXIS 257">*276 ii. Respondent's Expert Dr. Shapiro compared Green Street-reported market prices and NAVs to conclude that for the relevant period, his 52 guideline REITs traded at a 4.8-percent median price-to-NAV premium. To be conservative and to account for the difference that the partnership, unlike REITs, is not obligated to pay large and regular distributions to its interest holders, Dr. Shapiro looked below the median, to the 15th percentile, and began with an .8-percent discount as of March 25, 1996, and a 1.48-percent premium as of June 25, 1996. Dr. Shapiro concluded that these 15th-percentile REITs data should be adjusted downward in petitioner's favor to remove a liquidity premium that is inherent in REITs; i.e., a premium that arises because REIT interests, unlike the assets underlying them, are publicly traded in reasonably liquid markets. To gauge the size of this inherent liquidity premium, Dr. Shapiro referred to an academic study of private placement discounts for a period ending just before the valuation dates for the subject partnership interests. Bajaj et al., "Firm Value and Marketability Discounts", Dr. Shapiro then compared these results to his own study which suggested that minority interests in holding companies trade at a discount of 8.5 percent relative to controlling interests in holding companies. Adjudging holding companies to be comparable to the partnership in certain respects, he concluded that to be conservative he would apply this more favorable 8.5-percent minority interest discount to the partnership interests. Dr. Shapiro's study on holding companies is not in evidence. The minimal description of it in his testimony provides an inadequate basis for us to rely upon it in determining the appropriate minority2003 Tax Ct. Memo LEXIS 257">*278 interest discount here. We agree with Dr. Shapiro that, in order to derive a minority interest discount factor from REIT price-to-NAV data, one must account for the liquidity premium inherent in REIT data prices. See 3. Conclusion As explained above, we find that an 8.5-percent minority interest discount is appropriate in valuing the marketable securities component of the partnership interests and a 19-percent minority interest discount is appropriate in valuing the real estate component of the partnership interests. These minority interest discount factors yield weighted averages of 14.70 percent and 14.49 percent, as of April 19, 1996, and July 2, 1996, respectively. 2003 Tax Ct. Memo LEXIS 257">*281 D. Marketability Discount The experts agree that private placements of publicly traded stock are an appropriate starting place for determining a marketability discount here. The experts disagree on the appropriate private placements to be considered and what is measured by those comparisons. The experts also disagree on the inferences to be drawn from the partnership's specific characteristics. 1. Empirical Analysis a. Petitioner's Expert Mr. Oliver compared private-market prices of unregistered (restricted) shares in public corporations with the public-market prices of unrestricted but otherwise identical shares in the same corporations. 2003 Tax Ct. Memo LEXIS 257">*282 More particularly, starting with a preexisting MPI study analyzing 197 private transactions in common stocks of actively traded corporations from 1980 through 1995, Mr. Oliver identified a guideline group of 39 transactions in unregistered (restricted) stock. He determined that these 39 transactions occurred at prices reflecting discounts of 5.2 percent to 57.6 percent from the public- market price, with the median discount being 29.3 percent. Thirteen of the 39 companies in Mr. Oliver's guideline group appear to be high-technology companies and also to have some of the highest discounts, ostensibly reflecting greater risk. 2003 Tax Ct. Memo LEXIS 257">*283 b. Respondent's Expert Dr. Shapiro again relied primarily on the Bajaj study, which analyzed discounts observed in private placements of registered shares as well as private placements of unregistered (restricted) shares. The Bajaj study concluded that the portion of private placement discounts attributable solely to impaired marketability was 7.2 percent. We note initially that, in this context, we prefer Dr. Shapiro's "private placement" approach (as embodied in the Bajaj study) over Mr. Oliver's more narrow "restricted stock" approach. See Looking instead to the raw data from the Bajaj study, we see that the average discount with respect to its sample of private placements is 22.21 percent. 2003 Tax Ct. Memo LEXIS 257">*284 discount of 20.14 percent with respect to its sample of private placements. 2003 Tax Ct. Memo LEXIS 257">*285 of the following considerations: The partnership is closely held with no real prospect of becoming publicly held; the partnership is relatively small and little known; there is no present market for the partnership interests; the partnership agreement requires the partnership to be offered the right of first refusal to purchase, at a 15-percent discount, limited partnership interests; and the partnership agreement permits a transferee of a limited partnership interest to become a substituted limited partner only with the general partners' consent. b. Respondent's Expert Dr. Shapiro ultimately concluded that the marketability discount applicable to the partnership interests should be 8.3 percent, or 1.1-percent higher than the 7.2-percent discount that he said was indicated by the Bajaj study. In arriving at this upward adjustment, he considered a number of factors. He acknowledged that because the partnership is not scheduled for dissolution until 2045, the partnership interests are less marketable than restricted securities, thereby justifying some additional amount of discount. As a countervailing consideration, however, he opined that the appraised value of the partnership's real2003 Tax Ct. Memo LEXIS 257">*286 estate already incorporates a lack- of-marketability discount. He also acknowledged provisions of the partnership agreement that generally prevent the assignee of a limited partner's interest from becoming a partner and that require a limited partner who wished to sell his or her entire interest to offer the partnership a right of first refusal at a 15-percent discount. He concluded, however, that these restrictions had little effect on marketability. He observed, for instance, that a limited partner could easily circumvent the 15-percent discount associated with the right of first refusal by selling less than her entire interest. c. Conclusion On the basis of all the evidence and using our best judgment, we conclude that a 3-percent upward adjustment in the marketability discount rate (as determined by reference to the previously described empirical studies) is appropriate to incorporate characteristics specific to the partnership. Consequently, we find that a discount for lack of marketability of 24 percent is appropriate in determining the fair market value of each limited partnership interest that petitioner transferred in 1996. We conclude that for April 19, 1996, the2003 Tax Ct. Memo LEXIS 257">*287 fair market value of the 69.4815368-percent gifted partnership interests is $ 1,417,006, computed as follows: We conclude that for July 2, 1996, the fair market value of the 29.2184632-percent gifted partnership interest is $ 611,455, computed as follows:Total NAV as of 4/19/96 $ 3,156.882 1 percent of NAV 31,569 Less: 15-percent minority interest discount (4,735) 26,834 Less: 24-percent marketability discount (6,440) FMV of 1-percent interest 20,394 FMV of 69.4815368-percent interests 1,417,006 Total NAV as of 7/2/96 $ 3,239,531 1 percent of NAV 32,395 Less: 15-percent minority interest discount (4,859) 27,536 Less: 24-percent marketability discount (6,609) FMV of 1-percent interest 20,927 FMV of 29.2184632-percent interest 611,455
To reflect the foregoing,
Decision will be entered under
1. The real estate parcels, in Fruitport, Mich., and South Haven, Mich., were sites of two retail lumberyards formerly owned and operated by the Lappo family. In June 1995, Wickes Lumber Co. purchased all the lumberyard assets other than the real estate and entered into a 15-year lease for the real estate.↩
2. In addition to the valuation issue, the notice of deficiency also raised these alternative contentions: (1) There was no economic substance to the partnership's formation and operation; (2) the partnership interests should be valued without regard to any restriction on the right to use or sell the property within the meaning of
3. At trial, petitioner agreed to use respondent's (overall slightly higher) figures for the NAVs of the partnership's securities portfolio: $ 1,296,882 as of Apr. 19, 1996, and $ 1,379,531 as of July 2, 1996. The parties also agree that the fair market value of the partnership's real estate holdings was $ 1,860,000 at all relevant times. This agreed-upon value of the real estate is based on an appraisal report dated Jan. 24, 1996, and represents the market value of the leased fee estate as determined by an independent appraiser using a discounted cashflow analysis.↩
4. Effective for court proceedings arising in connection with examinations commencing after July 22, 1998, if certain requirements are met,
5. Mr. Oliver's seven valuation guideline companies included these three REITS: BRE Properties, Inc.; Cedar Income Fund, Ltd.; and Meridian Industrial Trust, Inc. His guideline companies included these four real estate companies: Arbor Prop. Trust (Arbor); Catellus Dev. Corp. (Catellus); The Rouse Co. (Rouse); and Shopco Laurel Centre, L.P. (Shopco).↩
6. For the relevant period, Catellus and Rouse were, unlike the partnership, highly leveraged taxable entities. Shopco, unlike the partnership, was in extreme financial trouble during the relevant period. Arbor had cut its dividends by 36 percent from the prior year, suggesting financial difficulty. The record contains no suggestion that the partnership was experiencing financial difficulties during any relevant period.
Although Mr. Oliver purports to make an adjustment to his guideline data reflecting that the partnership was in a better financial position than his guideline companies, as explained below, this factor is simply included in undifferentiated fashion among various other factors that result in his net adjustment increasing the partnership's price-to-NAV discount relative to his guideline companies.↩
7. Green Street Advisors, Inc. (Green Street), is an independent research and consulting firm concentrating on REITs and other publicly traded real estate companies. Respondent asserts, and petitioner does not dispute, that the REITs included in the Green Street reports make up 80 percent of the market capitalization of the overall market of about 200 REITs.↩
8. The parties generally agree that Green Street derived its NAVs in large part by applying various capitalization rates to the real estate net operating income generated by each company's portfolio. The appraisal report upon which the agreed-upon value of the partnership's real estate is based reflects a similar valuation method based on a discounted cashflow analysis of the partnership's net rental income stream.↩
9. Some of these upward adjustments are very large. For instance, in determining a $ 25,928,000 NAV for Shopco as of July 2, 1996, Mr. Oliver started with a reported book value of $ 4,862,000 and adjusted it upward by $ 21,066,000.↩
10. When questioned about this volatility at trial, Mr. Oliver merely observed that the discount rates changed "because the stock prices of these guideline companies are changing."↩
11. If we exclude from Mr. Oliver's guideline group the four real estate companies that we have found to be dissimilar to the partnership (admittedly thereby exacerbating the problem of the smallness of his sample), the median price-to-NAV relationship for the remaining three REITs is, as of Apr. 19, 1996, a 5.3-percent discount, and as of July 2, 1996, a .5-percent premium. As we shall presently see, these data are generally in line with the price-to-NAV data indicated by Dr. Shapiro's REITs guideline group.↩
12. More particularly, although Mr. Oliver acknowledges that the partnership was stronger financially than his guideline companies and that this factor augurs for a smaller discount for the partnership interests, he does not explain how he ultimately concluded that netting this factor against various other factors results in the particular upward adjustments to his guideline company discounts referenced above.↩
13. To make these calculations, Mr. Oliver relied on a study by Partnership Profiles, Inc., of Dallas, Tex., comparing the NAVs of RELPs with their trading prices in the secondary market. He used as his guideline group 14 of the 167 RELPs covered by the Partnership Profiles study.↩
14. In his expert report, Mr. Oliver states that the NAVs of the 167 RELPs covered by the Partnership Profiles "represent either estimates by general partners, appraised values determined by independent appraisers retained on behalf of the partnerships, or some combination of the two."↩
15. Wruck, "Equity Ownership Concentration and Firm Value: Evidence from Private Equity Financings", 23 J. Fin. Econ. 3 (1989); Hertzel & Smith, "Market Discounts and Shareholder Gains for Placing Equity Privately", 48 J. Fin. 459 (1993). We discuss such "private placement" studies more fully in the context of the marketability discount.↩
16. Bajaj et al., "Firm Value and Marketability Discounts,"
17.
18.
19. As Dr. Shapiro explains in his expert report: "If an illiquid security trades at a discount of 7% relative to a liquid asset, the liquid asset is trading at a premium of about 7.5% from the illiquid asset [1/(1-7%)]."↩
20. As of Apr. 19, 1996, these minority interest discount factors yield a weighted average of 14.70 percent, as calculated below:
| Percent | Percent | ||
| Asset | Percent | Disc. | Weighted |
| Class | of NAV | Factor | Average |
| Marketable | |||
| Securities | .41 | 8.5 | 3.49 |
| Real Estate | .59 | 19.0 | 11.21 |
| Total Weighted | |||
| Average | 14.70 |
As of July 2, 1996, these minority interest discount factors yield a weighted average of 14.49 percent, as calculated below:
| Percent | Percent | ||
| Asset | Percent | Disc. | Weighted |
| Class | of NAV | Factor | Average |
| Marketable | |||
| Securities | .43 | 8.5 | 3.66 |
| Real Estate | .57 | 19 | 10.83 |
| Total Weighted | |||
| Average | 14.49 |
21. Restricted shares, because they have not been registered with the SEC, generally cannot be sold in the public market for a 2-year period. See
22. These 13 companies and their indicated discounts are: Electro Nucleonics (24.8 percent); Bioplasty, Inc. (31.1 percent); Sym-Tek Systems, Inc. (31.6 percent); Anaren Microwave, Inc. (34.2 percent); North Hills Electronics, Inc. (36.6 percent); Newport Pharmaceuticals, Intl., Inc. (37.8 percent); Quadrex Corp. (39.4 percent); Del Electronics (41 percent); Ion Laser Technology, Inc. (41.1 percent); Chantal Pharmaceutical Corp. (44.8 percent); Western Digital Corp. (47.3 percent); Photographic Sciences Corp. (49.5 percent); and AW Computer Systems, Inc. (57.3 percent).↩
23. See Bajaj et al., supra at 107.↩
24. Hertzel & Smith, supra at 470. The other private placement study cited in the Bajaj study, the Wruck study, does not reveal an average discount for the overall sample.↩