To the extent that equity securities in private companies trade, preferred shares tend to be far more marketable than are common shares due to the nature of their rights and liquidation preferences. A number of theoretical models are based on option pricing theory, which have been successfully applied by practitioners in estimating the marketability discounts associated with privately held stock. However, none of these models has been modified to take into account the effects of complex capital structure, and consequently to quantify the differences in marketability discounts associated with preferred and common shares. The purpose of this paper is to extend the application of one of the simplest and most widely recognized discount for lack of marketability (DLOM) models—the protective put option—and to provide a framework for calculating the marketability discounts associated with different shareholder classes.