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Value added or subtracted

Your Humble Blogger, I’m afraid, can do nothing with the story that Mitt Romney vouched for low price on Staples stock that traded 10 times higher a year later other than give it to the redoubtable but hopefully not inimitable Clarke and Dawes.

BRIAN:      Thank you for tuning in; we’re here today with John Bainstable to talk about stock valuation.

JOHN:     Thank you, Brian.

BRIAN:     Thank you for coming. Now, you work in this field of stock valuation.

JOHN:     Stock valuation, yes.

BRIAN:     Can you briefly tell us what it is?

JOHN:     What stock valuation is?

BRIAN:     Yes, what it is you do?

JOHN:     Of course.

BRIAN:     Yes?

JOHN:     Absolutely, Brian. When we engage in stock valuation, what we are doing, in essence, is assigning a value to some stock.

BRIAN:     To the company?

JOHN:     No, Brian, no, I’m not some sort of mystical oracle that can tell you the value of a company.

BRIAN:     But—

JOHN:     No, I’m assigning a value to the stock.

BRIAN:     The stock.

JOHN:     That’s correct, Brian.

BRIAN:     Which are shares in a particular company.

JOHN:     I’m sorry?

BRIAN:     The stock that you are valuing—

JOHN:     Yes, the stock that I am valuing—

BRIAN:     —is stock, generally speaking, I suppose, in a particular company? It’s a particular company’s stock?

JOHN:     You’ve lost me.

BRIAN:     Well, John, perhaps a hypothetical example would help.

JOHN:     A hypothetical example, yes.

BRIAN:     Say I’m the founder of a company.

JOHN:     You’re the founder of a company.

BRIAN:     Thank you, and I come to you for a stock valuation. What is your first question?

JOHN:     My first question?

BRIAN:     Yes, what is the first thing you need to know.

JOHN:     Well, my first question is what’s going to happen to the stock? Is it going to be leveraged for a loan, or put into a trust fund, or, or is it being traded for some other company’s stock?

BRIAN:     You don’t ask, first, what business the company is in? I was thinking of an office-supply retailer—

JOHN:     Let’s not get dragged down into personalities, Brian. We’ve got to make an objective, scientific, accurate stock valuation, and the first question is, who is going to wind up with the stock?

BRIAN:     Well, John, it’s, it’s actually part of a divorce settlement.

JOHN:     A divorce?

BRIAN:     A divorce settlement.

JOHN:     A divorce settlement. Well, well, well. That’s a pretty problem, Brian. If you’ve got, say, a million—

BRIAN:     A million shares?

JOHN:     A million shares, and she’s getting half, well, we need to put a value on that stock, don’t we?

BRIAN:     Yes.

JOHN:     I mean, we need to know what that stock is worth!

BRIAN:     That’s right.

JOHN:     We’ve got to do a stock valuation.

BRIAN:     And how would you do that?

JOHN:     Well, do you like her?

BRIAN:     What?

JOHN:     Your wife, Brian, that you’re divorcing, any chance there?

BRIAN:     No.

JOHN:     No?

BRIAN:     No. Definitely not.

JOHN:     I’m sorry to hear that, Brian.

BRIAN:     I’ll get over it, John.

JOHN:     So we don’t want to value it too high, because then she’ll think you’re still a very rich man and she’ll ask for more. But if we put it too low, she’ll think she’s not getting enough and ask for more. So, let’s say, oh— a messy divorce?

BRIAN:     Well.

JOHN:     You’ll want a confidentiality agreement then.

BRIAN:     Absolutely.

JOHN:     All right, then, half a million shares, with a confidentiality agreement, I would value that stock at two dollars and twenty-five cents a share.

BRIAN:     Two twenty-five? The stock should be valued at two twenty-five?

JOHN:     That is my professional valuation, yes.

BRIAN:     And that would be a fair price?

JOHN:     A what?

BRIAN:     A fair price for the stock?

JOHN:     I’m not following you, Brian. You’ve lost me again.

BRIAN:     That somebody buying the stock at two dollars and twenty-five cents—

JOHN:     Hold on, there, Brian, we’re not talking about buying the stock are we?

BRIAN:     But if the company were to sell the stock—

JOHN:     Sell it! He needs to talk to a ruddy stockbroker, he does.

BRIAN:     Sell it to investors.

JOHN:     Oh, investors. That’s an entirely different process, Brian. We were talking about a divorce, not a show for investors.

BRIAN:     It’s a different process?

JOHN:     An entirely different process, Brian. Unless your ex-wife is the investor.

BRIAN:     No.

JOHN:     Are you the investor, Brian?

BRIAN:     No.

JOHN:     Or are you the investor under another name?

BRIAN:     What?

JOHN:     A holding company, a trust fund, a retirement account, anything like that?

BRIAN:     No, actual investors.

JOHN:     Not your second wife?

BRIAN:     No.

JOHN:     Well, then, a much higher valuation is in order, Brian, along the order of, I would say, at a conservative estimate, nineteen dollars.

BRIAN:     Nineteen?

JOHN:     Twenty.

BRIAN:     Twenty-one?

JOHN:     Twenty-two and a half.

BRIAN:     Done. Thank you for coming, John.

JOHN:     It’s been a pleasure.

Tolerabimus quod tolerare debemus,


Whistles and applause. Also laughter.

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