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Discounts for Lack of Marketability

Consideration for Closely Held Securities—DLOM Theoretical Models (Part II of II) This article summarizes the factors (and the empirical evidence) that the analyst may consider in the measurement of a discount for lack of marketability (DLOM) valuation adjustment associated with non-controlling securities of a closely held company. This security-level DLOM is different from the entity-level DLOM that is app ...

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Probability Based Estimation and the DLOM Calculation

Refining and Selecting the Appropriate DLOM The discount for lack of marketability (DLOM) is the result of illiquidity. It represents the inability to sell quickly when an investor decides to sell an asset. It is the economic cost of failing to realize gains or to avoid losses during the time period that the investor or closely held business owner is trying to sell the asset or securities. In this article, ...

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An Analysis of Discount For Lack of Marketability Models and Studies

Calculating Discounts Accurately Depends a Lot on Company Specifics. Here’s What You Need to Know Dennis Bingham and KC Conrad provide a thorough look at options for calculating a discount for lack of marketability (DLOM), including restricted stock studies, pre-IPO studies, theoretical and option pricing models, discounted cash flow (DCF), Mandelbaum factors, and more. ...

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