Large private firms often have active “internal” stock markets, which is something that should be examined when valuing a firm. “Sometimes you may have a firm of, for example, 400 people that has 60 or 70 shareholders,” says Ian Rusk (Rusk O’Brien Gido + Partners). “In each year there may be people retiring and their stock is being purchased by existing employees or new people coming into the firm. That is an active internal market to the extent that it is a healthy one where supply and demand are sort of in equilibrium. This reveals a level of liquidity to the stock that a firm without an internal market can’t demonstrate. This has a positive impact on value and it will cause us to perhaps use a lower discount for lack of liquidity than we would otherwise use.”

Rusk made his remarks during a recent webinar, Valuing Architecture & Engineering Firms. He is a contributing editor to the newly released 2015 A/E Business Valuation and M&A Transactions Study, which examines actual stock transactions among architectural, engineering, and environmental consulting firms nationwide over the last three years (over 230 in all).