BVR now offers the Johnson/Park DLOM studies

BVWireIssue #202-3
July 24, 2019

discount for lack of marketability (DLOM)
restricted stock, discount for lack of marketability (DLOM)

To estimate a discount for lack of marketability (DLOM), business appraisers typically look at the restricted stock studies and the IPO studies. The trouble is, just using the averages from these studies can be challenged because this approach lacks analytical support for the discount. One of the ways to bridge the gap between the studies and the DLOM is the Johnson/Park empirical method. This methodology has been used in several tax court cases including the first family limited partnership (FLP) case to go to trial. Also, it is the third most popular method business appraisers use to determine DLOMs, according to a BVR survey. The method highlights the relation of the DLOM to the return on the investment and quantitatively measures the impact of the rate of return as a function of the DLOM. The “2019 Discount for Lack of Marketability Study” provides objective rate of return measures to implement the Johnson/Park empirical method and includes a thorough explanation and example on how to apply these data. In addition to the most recent study, BVR offers all editions from 2014 to 2019. Click here for more information.
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