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BV News and Trends November 2021

A monthly roundup of key developments of interest to business valuation experts.

Latest issue of the ASA BVReview now in BVRPro

The BVResearch Pro platform contains the full archive of BVReview (going back to 1982!), the business valuation journal of the American Society of Appraisers.

A Current View of the Restricted Stock Studies and Restricted Stock Discounts

Although there is relevant evidence in some restricted stock studies that can be helpful for marketability discount determinations, comparisons with average discount observations from these studies do not provide a meaningful methodology to estimate marketability discounts. We conclude this despite the fact that too many valuation analysts continue to rely on simplistic comparisons with averages of restricted stock discounts from dated studies in their marketability discount determinations.

Red Flags Appear in BVR’s DLOM Survey Results

There are a number of areas of concern in the responses to BVR’s recent survey on methodology and practice for estimating a discount for lack of marketability (DLOM).

Mercer chimes in on BVR DLOM survey

“Our profession has a long way to go in terms of understanding what DLOMs, or marketability discounts, really are,” concludes Chris Mercer (Mercer Capital) in his analysis of BVR’s 2021 DLOM survey.

Full results of DLOM survey now available

BVR’s survey on methodology and practice for estimating a discount for lack of marketability (DLOM) garnered over 200 responses.

Ghaidarov Offers a New Framework for DLOM

Ghaidarov, who has published papers related to option price models for estimating a discount for lack of marketability (DLOM), presents a new concept for illiquidity discounts.

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.

Valuing Shareholder Cash Flows

The integrated theory of business valuation provides a conceptual framework for disciplined analysis of valuation questions. Too often, valuation analysts are tempted to view individual components of a valuation assignment on a piecemeal basis. Adhering to the integrated theory helps valuation analysts develop base valuation conclusions, discounts, and premiums that are rooted in a shared perspective of the subject company and the subject ownership interest. In the first webinar of the three-part series, Chris Mercer ...

Conceptual Overview of the Integrated Theory

The integrated theory of business valuation provides a conceptual framework for disciplined analysis of valuation questions. Too often, valuation analysts are tempted to view individual components of a valuation assignment on a piecemeal basis. Adhering to the integrated theory helps valuation analysts develop base valuation conclusions, discounts, and premiums that are rooted in a shared perspective of the subject company and the subject ownership interest. This first webinar in the three-part series sets the stage ...

BVU News and Trends September 2020

A monthly roundup of key developments of interest to business valuation experts.

Latest Study Available for the Empirical Method for Determining DLOM

The 2020 Discount for Lack of Marketability (DLOM) Study, recently released by Partnership Profiles, offers objective rate of return measures to implement the Johnson/Park empirical method. This method uses three approaches to measure the increase in return required to compensate investors for the lack of marketability of a subject interest.

New version of ‘Stout Restricted Stock Study Companion Guide’ now 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).

How much less is a minority share worth now?

HMRC changes have increased the difficulty of providing support for rates of return for illiquid and difficult-to-market minority shares.

2020 Johnson/Park DLOM study is now available

The Johnson/Park empirical method to estimate a discount for lack of marketability (DLOM) is the third most popular method business appraisers use for this purpose, according to a BVR survey.

Journal of Business Valuation 2015 Edition

From the CBV Institute ...

Demystifying the Complex World of Discounts for Lack of Marketability (Part 2)

This is part 2 of the DLOM webinar from 2/12/2020. 25%? 35%? 45%? What’s the deal with discounts for lack of marketability? Pasquale Rafanelli dives into what DLOMs are, when they should be applied, and how to apply them. Learn about the different types of approaches and methods that valuation experts can use to quantify the DLOM, along with practical pros and cons of each approach and method. Part 2 discusses the analytical approaches and ...

Demystifying the Complex World of Discounts for Lack of Marketability (Part 1)

Please note: This is a rebroadcast. 25%? 35%? 45%? What’s the deal with discounts for lack of marketability? Pasquale Rafanelli dives into what DLOMs are, when they should be applied, and how to apply them. Learn about the different types of approaches and methods that valuation experts can use to quantify the DLOM, along with practical pros and cons of each approach and method. This session focuses on benchmark study approaches and security-based approaches. Please note ...

BVU News and Trends January 2020

A monthly roundup of key developments of interest to business valuation experts.

BV data: Sometimes it just ‘is what it is’

Empirical data are the backbone of defensible business valuations, but there are strengths and weaknesses with all data.

BVU News and Trends October 2019

A monthly roundup of key developments of interest to business valuation experts.

Dig deeper into restricted stock studies for DLOM

A common approach to developing a discount for lack of marketability (DLOM) when using restricted stock studies is to simply list their averages and use those figures in the estimate.

Demystifying the Complex World of Discounts for Lack of Marketability

25%? 35%? 45%? What's the deal with discounts for lack of marketability? Pasquale Rafanelli dives into what DLOMs are, when they should be applied, and how to apply them. Learn about the different types of approaches and methods that valuation experts can use to quantify the DLOM, along with practical pros and cons of each approach and method.

Vianello offers free e-book on empirical research regarding DLOM

“When I entered the valuation field, I quickly became very dissatisfied with the available means of estimating DLOM,” writes Marc Vianello (Vianello Forensic Consulting LLC).

BVR now offers the Johnson/Park DLOM studies

To estimate a discount for lack of marketability (DLOM), business appraisers typically look at the restricted stock studies and the IPO studies.

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