Almost a quarter (22%) of valuation analysts polled say they use the quantitative marketability discount model (QMDM) for quantifying a discount for lack of marketability (DLOM). This percentage is double the results from our 2018 survey, when 11% reported that they use this method. We point out that this year’s survey had over 200 respondents, which is twice the number as the 2018 survey. The full results of BVR’s 2021 DLOM survey are available as a free download if you click here.

First introduced in 1997 by Chris Mercer (Mercer Capital), the QMDM is a shareholder-level DCF model that values interests in a business in the context of an appraisal of the entire enterprise. The model focuses on shareholder-level cash flows, risk, and growth to reflect what a willing buyer would pay for a willing seller’s interest. The model is discussed in detail in the recently released third edition of the book, Business Valuation: An Integrated Theory, which Mercer co-wrote with Travis W. Harms (Mercer Capital). They also discussed the model and went through several case studies in the final part of a three-part webinar series for BVR.