As we mentioned in the discussion of our DCF online survey, the application of a marketability discount to a controlling interest in a private company is still subject to wide debate among BV professionals. For example, a small DLOM (10%) is appropriate to account for the costs of selling the company in its entirety, says one survey respondent, but another one points out that during the sale period, the 100% owner will always have access to the same cash flows that lead to a control-basis value. Most of the participants simply say, “it depends,” primarily on the facts and circumstances of the subject company as well as the purpose of the valuation engagement.
To help settle the more difficult questions, on November 1 join Jim Alerding (Alerding Consulting) and Jim Ewart (Dixon Hughes Goodman) for Control Premiums & Discounts. The pair of experts will review the current landscape of legal cases as well as both sides of the professional debate on the complex and sometimes controversial topic of premiums and discounts. They will look at business operations, income, goodwill, and other factors to help make the determination as objective and supportable as possible.
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