Courts are continually asking for more accurate, empirical data in determining discounts for lack of marketability. Tax Court judges, in particular, have become more sophisticated when it comes to valuation issues and are more likely to reject simple averages or medians calculated over a specific time period. The BV profession has evolved, too—as have the data sources they need to produce credible, clearly supported valuations for the courts and their clients.
The FMV Restricted Stock Study™ provides comparative empirical data on restricted stock transactions for appraisers to use in support of their discounts for lack of marketability. For the first time, FMV Opinions (the authors of the database) have created a tutorial on using the data. The free case study describes an effective, three-step methodology for determining DLOM for a minority interest in a privately held company: First, it provides background information regarding a hypothetical minority interest in an operating company, including company-specific as well as broader economic data. Second, it describes the valuation theory and empirical data related to the determination of the DLOM; and finally, it applies this methodology to the specific case. Don’t miss this opportunity to learn more about the database and solidify your DLOM calculations for the future.