Marketability discounts frequently a big money appraisal controversy

Business Valuation Update
April 18, 2001
Shannon P. Pratt, CFA, ARM, ABAR, FASA, MCBA, CM&AA
discounts & premiums
bankruptcy, pre-IPO, restricted stock study, discount for lack of marketability (DLOM), minority oppression


The applicability and/or magnitude of discounts for lack of marketability often are a large, if not the largest, money issue in a disputed business valuation. Lawyers should know enough about marketability discounts to make at least a preliminary judgment about their own and the opposing expert's justification as to the applicability or lack if it, and if applicable, justification as to the magnitude.