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Forensic & Valuation Services Conference 2019


FVC1957 - DLOM - Back to the Basics


Nov 6, 2019 10:30am ‐ Nov 6, 2019 11:45am

Standard: $49.00

Description

How can appraisers determine the appropriate marketability discount for each valuation situation? This is a critical question since the discount for lack of marketability is the single largest valuation adjustment factor in most minority interest appraisals. The marketability discount is normally expressed as a percentage to reflect the difference between two prices, the freely marketable price, which for closely held businesses is a hypothetical construct since by definition there is no market for their shares, and a nonmarketable price.

Learning Objectives:
  • What gives rise to a marketability discount, or the discount for lack of marketability, or DLOM?
  • How do we determine the DLOM, given the central objective of arriving at credible nonmarketable minority values?
  • What methods are used to quantify DLOM? How do the methods rank in terms of valuation theory?

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