Latest Court Looks at DLOM: Assumptions Are Everything
In gift/estate case, court considers discounts for lack of marketability and control for LLPs/LLCs and rejects flawed applications of QMDM and Mergerstat data.
Editor believes Tax Court erred in McCord case illiquidity discount
In the case of McCord v. Commissioner, I believe that the Tax Court erred in both its methodology and its final conclusion regarding the discount for lack of marketability.
DLOM survey reveals methods of choice
The use of restricted stock studies remains the most cited methodology for quantifying a discount for lack of marketability (DLOM), according to the preliminary results of BVR’s 2021 DLOM survey.
Discounts and premiums must be supported with empirical data
In my April 2001 Editor's Column I discussed the treatment of marketability discounts in court cases, and briefly touched on empirical data to support those discounts. This column is a follow-up and includes an expanded discussion of the empirical studies available not only for marketability discounts, but for control premiums and minority discounts as well.
2000 Marketability Discounts as Reflected in Initial Public Offerings
Copyright 2001 by Brian K. Pearson CPA/ABV/PFS, ASA We recently completed our second study on the Discounts for Lack of Marketability. Our study was of Initial Public Offerings (IPOs) in 2000.
Determining DLOM: a little like waitingfor Godot …?
If any consensus came out of our last survey on the discount for lack of marketability, it was to acknowledge the frustrating lack of consensus.
The value of marketability as illustrated in dot.com IPOs: May 1997-March 2000
This study is an outgrowth of the eight pre-IPO discount studies published by John D. Emory, Sr. covering 1980-1997. The complete results of this study, with exhibits and expanded text analysis ...
Stout Restricted Stock Study FAQs
Stout Restricted Stock Study FAQs | Business Valuation Resources Search Stout Restricted Stock Study Frequently Asked Questions (FAQs) Thank you for visiting the FAQ page for the Stout Restricted Stock Study™. If you're unable to find the answer you are looking for, please contact us at 1-503-479-8200 or customerservice@bvresources.com and we are happy to help. Download PDF version of the Stout Restricted Stock Study Companion Guide View the FAQs for the Stout DLOM Calculator™ Q:
Empirical evidence shows holding period of major determinant of marketability discount
An incorrect and misleading assertion was contained in the article "Predicting Lack of Marketability Discounts by Use of an Econometric (Statistical Regression) Model" by Dr. John Kania , a ...
Lack of marketability discounts suffer more controversial attacks
The apparently well-meaning Drs. John Kania and Mukesh Bajaj are at it again, espousing discounts for lack of marketability for stocks of closely held companies that are a fraction of those encountered in the real world.
Case Study: Applying the Empirical Method to Determine a DLOM
Is your DLOM accurate? Is your DLOM objective? Does your DLOM result in an increase in the effective rate of return of the investment? Join Bruce Johnson, of Munroe, Park & Johnson, for an in-depth case study that will empower you to answer these questions with even greater confidence. Master the resources and case law you can deploy when creating a defensible opinion in a minority valuation. An understanding of the empirical method is an ...
Tax Court Rejects QMDM and Use of Single Comparable
In this estate tax matter, the Tax Court addressed basic valuation issues dealing with minority interest and illiquidity discounts in the context of a limited partnership interest.
Review: Discount for Lack of Marketability Guide and Toolkit
When valuing companies under the fair market value standard, many practitioners devote the majority of their report to explaining the valuation approach but then deduct a discount for lack of marketability (DLOM) that materially reduces value without prov ...
Pratt says Prof. Comment’s DLOM paper has ‘serious flaws’
The working paper by Dr. Robert Comment (Johns Hopkins Univ.), “Business Valuation, DLOM and Daubert: The Issue of Redundancy” has caused a small firestorm.
Restricted Stock Studies' Typical Results Do Not Provide "Benchmark" for Determining Marketability Discounts - But They Do Help
"Restricted Stock Discounts Decline As Result Of 1-Year Holding Period" reads the title of the lead article in the May 2000 issue of SHANNON PRATT'S BUSINESS VALUATION UPDATE. The subtitle reads: "Studies After 1990 'No Longer Relevant' For Lack Of Market ...
Why are restricted stock discounts actually larger for one-year holding periods?
The FMV Restricted Stock Study™ has long been the largest empirical analysis of restricted stock transactions and is becoming a commonly used data source for appraisers looking to determine ...
Stout DLOM Calculator Sample Report
Sample Reports
A sample report from the Stout DLOM Calculator that includes the subject company, valuation date, market value of equity, revenues, total assets, and more.
Private firms linger longer on the selling block
A newly updated analysis of data from BVR’s Pratt's Stats reveals that the time needed to market and sell a privately held business is 211 days, up from 200 days in the previous analysis.
Mercer's "Quantifying Marketability Discounts" uses DCF model
Reviewed by Shannon Pratt Mercer, Z. Christopher , Quantifying Marketability Discounts : Developing and Supporting Marketability Discounts in the Appraisal of Closely Held Business Intere ...
Restricted stock discounts decline as result of 1-year holding period
This article addresses the changes in the marketplace for restricted securities that have occurred since 1990 and the impact that those changes have had on the overall level of discounts for ...
For ABVs and ABV aspirants
A CPA's Guide to Valuing a Closely Held Business , Gary R. Trugman , American Institute of Certified Public Accountants, 2001. Available from Business Valuation Resources, 7412 S.W. Beaverton-Hillsd ...
Laro/Hitchner qualify DLOM models and methods
We have continued to receive more responses to the BVWire™ item that quoted U.S. Tax Court Judge David Laro.
‘Benchmark average’ approach dominates for DLOM
The use of restricted stock studies is the most cited methodology for quantifying a discount for lack of marketability (DLOM), according to the results of our DLOM survey.
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 ...
CPE Events
Blockchain Forensics - Part 1 . Tuesday, December 13, 2022, 10:00am-11:40am PT • 1:00pm-2:40pm ET; Featuring: Dorthy Haraminac (GreenVets, LLC). CPE Credits: 2.0.