In response to our item last week on the IPEV guidelines’ approach to applying a marketability discount to PE and VC valuations, Rod Burkert (Burkert Valuation Advisors) writes: “A DLOM is normally taken at the subject-interest level—not at the (100%) entity level or the (100%) equity level—because you are trying to estimate the marketability/transferability of a particular interest, not the company itself.

“In fact, there is no unanimous agreement in the profession as to whether a DLOM should be applied for a 100% interest (entity or equity level),” Burkert adds. “So, the IPEV approach would make one believe that a pro rata DLOM, if taken at the entity level, is valid for a 100% interest or a 1% interest  . . . or anywhere in between. I don't see how that can be true.”