Business Valuation Update
- How to Review a Report’s Valuation Methodology
- Ideas for Solving Two Problems in the BV Profession
- How Do Your Firm’s Benefits Stack Up?
- Using Rule of Thumb Data to Uncover Cooked Books
National CLE Conference addresses valuation issues
From Jan. 3-15, 2000, Law Education Institute held its annual National CLE Conference in Vail, Colorado. The general focus of the conference was to address the basics of various areas of law, incl ...
IRS adequate disclosure final regulations respond to extensive comments
On Dec. 22, 1998, the IRS published proposed regulations regarding adequate disclosure of gifts on gift tax returns. Extensive written comments responding to the Federal Register notice were receive ...
Marketability discounts for S corp banks
S Corporation Commercial Bank Valuation Methods and Issues , Robert F. Reilly, Valuation Strategies , May/June 2002, Vol. 5, No. 5, pp. 28-33, 48. As more commercial banks elect S corporation st ...
How to apply the Silber model in a valuation
Predicting Lack of Marketability Discounts by Use of an Econometric (Statistical Regression) Model, John J. Kania, Business Valuation Review , December 2002, pp.175-180. This article includ ...
Quantitative approaches to determining lack of marketability discounts
When determining a discount for lack of marketability, a quantitative approach like the Tabak model or the Quantitative Marketability Discount Model (QMDM) may prove useful.
FMV to release its restricted stock study
Bringing Sanity to Marketability Discounts: A New Data Source, Espen Robak and Lance S. Hall , Valuation Strategies , July/August 2001, pp. 6-13, 45-46. Over the years, several approaches h ...
Low risk, high book value
"Marketability Discounts and Risk in Transactions Prior to Initial Public Offerings." Philip Saunders, Jr., Business Valuation Review , December 2000, pp. 186-95. Saunders' analysis of the Emor ...
An analysis of restricted stock studies
Marketability Discounts – A Comprehensive Analysis , Darrell D. Dorrell , The Valuation Examiner , March/April 2002, pp. 23-31. Restricted stocks are stocks for which a public market will be availab ...
New 1999 pre-IPO discount study shows average discounts at 48.97%
"1999 Marketability Discounts as Reflected in Initial Public Offerings," Brian K. Pearson , CPA Expert , Spring 2000, pp. 1-6. A new study of pre-IPO transactions conducted by Valuation Advisors ...
Mercer responds to Columbia Financial's restricted stock study
"Restricted Stock Studies' Typical Results Do Not Provide 'Benchmark' for Determining Marketability Discounts—But They Do Help," Z. Christopher Mercer and Timothy R. Lee , E-Law Business Valuation ...
5th Circuit Reverses McCord, Confirming Original Valuation of Marketability Discounts
5th circuit overturns McCord v. Comm’r (Tax Court, 2003) and confirms calculation of marketability discounts in complex gift tax case.
Kentucky Adopts ‘Modern Rule’ Regarding Minority and Marketability Discounts in Statutory Fair Value
Kentucky reviews case law and authorities and adopts majority rule precluding application of marketability discounts in dissenting shareholder appraisals.
Kansas Supreme Court Disallows Minority and Marketability Discounts in Shareholder Freeze-Out
The Supreme Court of Kansas heard an issue of first impression in this case: "Is it proper for a corporation to determine the 'fair value' of a fractional share pursuant to K.S.A. 17-6405 by applying minority and marketability discounts when the fractional share resulted from a reverse stock split intended to eliminate the minority shareholder's interest in the corporation?"
2000 marketability discounts as reflected in initial public offerings
This interview by Alina Niculita is based on the Valuation Advisors Study of pre-IPO transactions for the year 2000. The complete article describing the study is available on BVLibrary.com ...
How Probability Affects Discounts for Lack of Marketability
Traditional methods for determining a discount for lack of marketability (DLOM) fall short for several reasons. Restricted stock and pre-IPO studies do not have a sufficient number of transactions, and they do not reflect “price risk.”
Adjusting the Restricted Stock Transactions to Estimate Marketability Discounts
The courts have been critical of using restricted stock studies to estimate a discount for lack of marketability (DLOM). In particular, they question the use of averages culled from historical studies without specific reference to subject companies and st ...
NY’s Unfair Application of Shareholder-Level Marketability Discounts
The statutory standard of value in dissenting shareholder cases in most states is “fair value.” New York and 47 other states use the “fair value” standard in appraisals. As a valuation measure, most states interpret fair value as the shareholder’s pro ra ...
FMV’s Two-Year Equivalent Discounts for Lack of Marketability Methodology and Calculator
FMV’s two-year equivalent Discount for Lack of Marketability Calculator is a significant tool that has been modified to render current restricted stock data meaningfully comparable to private companies.
Valuing an interest in an RELP
A Study of the Discounts Inherent in the P/NAV Multiples of Real Estate Limited Partnerships, Russell T. Glazer , Business Appraisal Practice, Winter 2000-2001, pp.22-28. This article addresses ...
Regression models not appropriate to predict DLOMs
A Note on Using Regression Models to Predict the Marketability Discount , Stanley Jay Feldman, Business Valuation Review , September 2002, pp. 145-151. This article critiques r ...
Lack-of-marketability discount may "swallow up" fair market value
"Further Adventures With the Lack-of-Marketability Discount," Bogdanski, John A., Estate Planning , June 1999, pp. 235-239. The marketability discount for closely held companies continues to appe ...
Five reasons for partnership discount
Partnership Re-Sale Discounts Justified , The Partnership Spectrum , January/February 2002, pp. 1-7. Partnership interests trade in the secondary market at discounts mostly due to a lack of mar ...
The future of DLOMs
The article starts by laying the theoretical foundations for applying a marketability discount (DLOM). As Mercer puts it, "Without any reference to empirical observation, the fact of marketability dis ...
Appraisers must support marketability discount
Based on recent Tax Court decisions, it is apparent that blindly applying a standard 35% marketability discount will not be favored. In other words, the appraiser better be able to support his/her discount.
Pre-IPO studies overestimate discount
Marketability Discount Concerns , Jon Paulsen, Business Valuation Review , March 2001, Vol. 20, No. 1, pp. 24-25. This article identifies some of the problems in deriving and applying the mar ...