The Finnerty average put model is the option-based method cited the most for estimating a discount for lack of marketability (DLOM), according to our recent survey. Forty-three percent of respondents used the Finnerty model “always” or “mostly” (see below). This is consistent with prior surveys we’ve done, with the Chaffe and Longstaff models in second and third place, respectively.
Which of the Following Option-Based Methods Do You Use to Estimate a DLOM?
| Always | Mostly | Sometimes | Never | |
| Finnerty average put model | 22.5% | 20.0% | 15.0% | 42.5% |
| Chaffe put option model | 12.2% | 14.6% | 34.2% | 39.0% |
| Longstaff lookback put model | 7.9% | 5.3% | 23.7% | 63.2% |
| Ghaidarov average put model | 8.1% | 2.7% | 16.2% | 73.0% |
| Shout DLOM put model | 2.8% | 0.0% | 22.2% | 75.0% |
| Other | 9.4% | 9.4% | 15.6% | 65.6% |
The “Other” category included the Ghaidarov forward start put option model, Fisher-Merton-Black-Scholes, Asian put, protective put, and a “combination of more models.”
The survey was done to gauge interest in a new online calculator that uses the Margrabe options approach. It has been developed by Dr. Ashok Abbott (West Virginia University), who would like some feedback, including suggestions for improvements, additional features desired, and possible extensions. You can access the calculator at dev.optionmodeldlom.com. Dr. Abbott’s contact information is on the calculator.