Which option-based methods are favored for DLOM?
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.
Good deal of interest in new option-based DLOM calculator
We were happy to see the number of readers who were interested in trying out an online calculator for estimating a discount for lack of marketability (DLOM) we announced last issue.
Interested in more support for your DLOM?
There have been some rumblings in the business valuation profession about the validity of the traditional ways to estimate a discount for lack of marketability (DLOM).
2023 Johnson/Park DLOM study is now available
The Johnson/Park empirical method to estimate a discount for lack of marketability (DLOM) has been used in several tax court cases, including the first family limited partnership (FLP) case to go to trial.
2023 Discount for Lack of Marketability Study
January 2024 PDF (9 pages)
Bruce A. Johnson, James R. Park
Partnership Profiles, Inc.
Business Valuation Update Yearbook, 2024 Edition
January 2024 PDF, Softcover (401 pages)
BVR (editor)
Business Valuation Resources, LLC
Business Valuation Case Law Yearbook, 2024 Edition
January 2024 PDF, Softcover (222 pages)
BVR (editor)
Business Valuation Resources, LLC
Free updated guide to the Stout restricted stock study
The 2023 edition of the “Stout Restricted Stock Study Companion Guide” is now available, and it reflects updated tables and graphs that contain new transactions.
New app for the Margrabe options approach to DLOM
Dr. Ashok Abbott (West Virginia University) is developing a calculator that uses the Margrabe options approach to estimating a discount for lack of marketability (DLOM).
2023 Stout restricted stock study guide now available
The 2023 edition of the “Stout Restricted Stock Study Companion Guide” is now available, and it reflects updated tables and graphs that contain new transactions.
NICE DLOM Method for FLPs Gets Peer Reviewed
A paper describing the theory and mechanics of the nonmarketable investment company evaluation (NICE) method for estimating a discount for lack of marketability (DLOM) has been published in the Business Valuation Review, the peer-reviewed journal of the American Society of Appraisers.
Stout updates its restricted stock study companion guide
The 2022 edition of the “Stout Restricted Stock Study Companion Guide” is now available, and it reflects updated tables and graphs that contain new transactions.
Users inspire update to the Stout DLOM calculator
Estimating a discount for lack of marketability (DLOM) has just become more robust with a new update to the Stout DLOM calculator.
New ‘Court Cases Method’ for DLOM Points Up a Conundrum
A new study analyzes court cases to determine a more legally defensible discount for lack of marketability (DLOM). But should business valuers look to court cases for “good” valuations?
How to Use the Latest DLOM Study for the Johnson/Park Empirical Method
An example of how to apply the Johnson/Park empirical method, which is based on the fundamental concept of risk and reward. The annual study serves as a basis to determine how much of an increase in the rate of return is required to compensate investors for the lack of marketability of a subject interest.
More courts KO DLOM when business won’t be sold
Keep an eye out for courts in more states deciding to eliminate a discount for lack of marketability (DLOM) depending on whether the business will be sold.
Business Valuation Update Yearbook, 2023 Edition
January 2023 PDF, Softcover (426 pages)
BVR (editor)
Business Valuation Resources, LLC
2022 Johnson/Park DLOM study is now available
The Johnson/Park empirical method to estimate a discount for lack of marketability (DLOM) is one of the most popular methods business appraisers use for this purpose, according to a BVR survey.
2022 Discount for Lack of Marketability Study
November 2022 PDF (9 pages)
Bruce A. Johnson, James R. Park
Johnson/Park
A Smorgasbord of Valuation Issues
Where to start with the delicious buffet of valuation issues presented in Fair v. Fair , a Louisiana Court of Appeals divorce case. The primary issue in the case was the valuation of the husband’s community estate business known in the case as SIS. The business sells surgical medical equipment GE made.
Mercer’s latest on restricted stock studies
Chris Mercer (Mercer Capital) has been writing a series of articles designed to provide a complete analysis of the historical restricted stock studies many business appraisers rely on for estimating a discount for lack of marketability (DLOM).
Why Pre-IPO Studies Are Unsound in Concept and in Practice
This article explains why pre–initial public offering (IPO) studies are not a valid basis for determining marketability discounts. They are unsound in concept because the pre-IPO transactions and the subsequent IPO are priced at materially different dates and because the IPO price is not knowable at the earlier date. They are unsound in practice for several reasons, such as selectivity—the data include only companies that subsequently become publicly traded—and the fact that any pre-IPO discount ...
New Version of the NICE DLOM Method Now Freely Available
William Frazier (Weaver) has a new version of his nonmarketable investment company evaluation (NICE) method for estimating a discount for lack of marketability (DLOM). An Excel template for the revised version, aptly named NICE-R, is now available.
Updated ‘Stout Restricted Stock Study Companion Guide’ available
The most widely used restricted stock transaction database for providing empirical support for a discount for lack of marketability (DLOM) is the Stout Restricted Stock Study (formerly FMV Opinions).
Business Valuation Update Yearbook, 2022 Edition
January 2022 PDF (454 pages)
BVR (editor)
Business Valuation Resources, LLC