Illiquidity Discounts for Restricted Equity Securities with Random or Indefinite Liquidity Horizons
Illiquidity discounts depend on the length of the trading restriction period. Existing theoretical restricted stock discount models are adapted to situations in which the trading restriction period has a well-defined fixed length. In many scenarios, the private equity investor faces a liquidity horizon that may be random or indefinite rather than of known fixed length. Stillian Ghaidarov will review a simple and robust methodology that allows us to extend the use of restricted stock discount ...
Indiana and South Carolina courts issue key discount rulings
The Indiana Court of Appeals and the South Carolina Supreme Court recently issued noteworthy rulings on the appropriateness of discounts in valuing minority interests. The contexts in which the issue arose were different, but both situations amounted to a compelled buyback of shares.
New Jersey court applies DLOM in forced buyout: Defendant’s conduct created ‘extraordinary circumstance’
In adjudicating a New Jersey family dispute that escalated into an oppressed shareholder action, the trial court recently found the oppressing shareholder had created a situation that mandated the application of a discount for marketability (DLOM) in order to achieve a “fair and equitable” outcome.