Business Valuation Update
- Perception Grows of Bias in U.S. Valuation Experts
- Popular Real Estate DLOC Database Is Not Going Away
- Key Points From Hitchner’s Annual BV Update
- What to Glean From the IRS Hiring Binge for BV Experts
IBA Symposium Hot Topics
At the IBA’s symposium in Chicago earlier this summer, lively discussions took place about three hot topics: 1) when subsequent events should be included in a valuation report, 2) whether lack of marketability or illiquidity discounts should be taken or ...
Dot.com discount not all marketability
I am writing regarding the article in the July 2000 issue of BVU on marketability as illustrated in dot.com IPOs. This interesting study observes that the median private placement price is a ...
Layered discounts for FLPs
We are currently determining the value of an FLP that holds minority interests in other entities that also have minority interests in other entities. Is it correct/conservative to apply mino ...
Small gifts from control block
If a 100% controlling shareholder wants to gift $20,000 per year to a family niece or nephew, who would be receiving the interest as a minority holder?
Yes, restricted stock studies do matter after 1990
I read the May 2000 edition of Business Valuation Update with interest. I was specifically attracted to the guest article that discussed restricted stock discount studies.
Engstrom backs his examination of the QMDM
In the March 2001 edition of Shannon Pratts Business Valuation Update , I explained that the Quantitative Marketability Discount Model (QMDM) is heavily influenced by elements of control, s ...
Why did marketability discount numbers change in 3rd edition?
I was looking at the Willamette Management Associates discount for marketability study that is detailed in the third edition of Valuing a Business (page 348). I note that your numbers have ...
Fractional interest discounts
Your review of my article in Valuation Strategies, "Would You Buy an Undivided Interest?" (co-authored with Gerald E. Lunn) makes reference to the section "Minority or Marketability Disc ...
Restricted stock references
I am doing a valuation of a partnership which owns 3.5 million shares (35%) of restricted stock in a public company. The public company trades an average of under 10,000 shares per day. Wher ...
Does block size affect DLOM
Has anyone ever published data indicating premiums or discounts for varying ownership percentages? For instance, has anyone produced the following chart for a privately held company?
Follow-up to “layered discounts” question
I agree with Dr. Pratt’s response to Kimberly Beaucort’s question about “layered discounts” in the July 2003 issue (page 13, bottom right corner ...
Examination of Mercers QMDM reveals inadvertent error
In this exchange between Eric Engstrom and Chris Mercer, Eric pinpoints an inadvertent error in Mercers "Base Case" for his Quantitative Marketability Discount Model. Erics interpretation wo ...
Fractional interest discounts
Your review of my article in Valuation Strategies, "Would You Buy an Undivided Interest?" (co-authored with Gerald E. Lunn) makes reference to the section "Minority or Ma ...
DLOM applies to equity only
When valuing a subject on a fully invested basis under the income approach and applying a WACC model using bank borrowing rates for the debt component, do discounts for lack of marketabilit ...
Comment regarding updated Levels of Value Chart
It seems like there could be a double-counting issue in what is being done related to sizing the increment over the restricted stock discounts.
Access to restricted stock studies
I have a question regarding the Editors Column feature in the February 2002 issue of Shannon Pratts Business Valuation Update. On page 3, middle column, under "Empirical research shows holding period important," Dr. Pratt makes the following statements about the restricted stock studies ...
Article critiques the Tax Court's decision and experts' avidence in the Mandelbaum case
Hall, Lance S. and David M. Eckstein, "Ten Easy Steps to Determine Discounts: Fact or Fiction?" Article forthcoming in December issue of the CEB Estate Planning and California Probate Re ...
Finding restricted stock data
Thank you for publishing the Business Valuation Update. Our firm has found it resourceful, well-written and informative. I am in the process of collecting information regarding lack of mark ...
Discounts for minority-owned-companies
I am currently determining the fair market value of a company that is 100% owned by an African American. The company has enjoyed stable revenue from contracts requiring continued minority ow ...
How to apply DLOM
I have a little dispute with my colleagues about the correct way to use a marketability discount. Based on P/E multiples from American studies, we normally use a discount of 30%. However, i ...
Discounts applied on 50% interest
I am a recent subscriber to Business Valuation Update, although I requested that my subscription begin with the beginning of the publication so that I would not miss any issues. In reading the December, 1995 issue I noted your discussion on page 9 regarding the Matter of Scottston v. Scottston, Court of Appeals of Minnesota, filed 9/19/95 (1995 Minn. App. LEXIS 1208). I was the appraiser for the owner of Preferred State Bank and ...
Applicability of the Davis case
The court in the Davis case allowed an increased marketability discount to recognize the potential built-in gains tax. The Eisenberg case also appears to follow the same path. In both c ...
Estate expert in recent McCord case discusses the Tax Court’s opinion
McCord had all the makings of a great valuation test case for FLPs, but, unfortunately, the result handed down by the Tax Court seemed more an exercise in splitting the baby between the taxp ...
Minority interest valuations; U.S. Tax Court judge calendars
I have prized your summation method. The logic is appealing. Also, it neatly bypasses the elusive question of determining a supportable minority discount (15%-90% ?). As to finding a public ...
Real estate partial interests
Per your request in the June 1996 issue of Shannon Pratt’s Business Valuation Update Reader/Editor Exchange, the following are cites to articles I have accumulated on valuation of real estate partial interests: Healy, Martin J. Jr., “Valuation of Partial Interests,” The Appraisal Journal, July, 1988, pp. 293-98. Management Planning, Inc., “Minority Interest, Fractional Interest and Marketability Discounts for Interests in Real Estate,” Business Valuation Report , Volume 55, No. 1, pp. 1-2. Thompson, Mark S.