The two most widely approaches used by valuators to determine a discount for lack of marketability (DLOM) are restricted stock studies and IPO studies. The restricted stock studies compare transaction prices in restricted shares with contemporaneous trading prices for unrestricted shares. The pre-IPO studies, on the other hand, according to the author, lead to conclusions that are unsound in theory and in p ...

(Part III of IV) This is the third of a four-part article that sets forth best practices for estimating the company-specific risk premium. This part of the discussion describes the various empirical data sources that analysts may consider as proxies—or benchmarks—or approximations—in developing the CSRP estimate. [su_pullquote align="right"]Resources: Best Practices for Estimating the Company-Specific Risk ...

April 2019 In the first quarter of 2019, there were no reported U.S. Tax Court cases involving either business, estate, or FLP valuation issues. Notwithstanding the above, there were several cases that valuation and litigation support professionals will want to consider. In this article, five recent cases are discussed. One of the leading cases circulating amongst the business valuation community is Kress v ...

Authored by: James R. Hitchner; R. James Alerding; Joshua B. Angell; and Katherine E. Morris The author provides a review of Discount for Lack of Marketability Guide and Toolkit, authored by James Hitchner; R. James Alerding; Joshua B. Angell; and Katherine E. Morris. ...

Consideration for Closely Held Securities, Part I of II Valuation analysts may be asked to value closely held company securities for various reasons. These reasons include transaction pricing, financial accounting, taxation planning and compliance, and litigation (related to both breach of contract and tort claims). Depending on: 1) the business valuation approaches and methods applied; and 2) the benchmark ...

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, ...