2024 IAC BV - Re-thinking DLOCs and DLOMs from Market Evidence

Session Description

BV theory is that Discounts for Lack of Control (“DLOC”) are derived from evidence of Control Premiums in Mergerstat Review and the FactSet Mergerstat/BVR Control Premium Study.  There are negative control premiums, and “Strategic” and “Financial” acquisitions.   Many businesses have no presumption of acquisition, and may not see control basis adjustments to the financial statements.  If the prerogatives for control do not suggest substantial differences between controlling and non-controlling cash flows, why would the DLOC be high?  The issue of a Discount for Lack of Marketability is likely the most hotly debated subject in Estate and Gift work, and is normally applied based not only on the “studies” but also specific market evidence.   Should an appraiser apply both of these discounts in every method?  This session will provide differential statistics and discuss the likely steps appraisers should consider in using market data to derive a supportable DLOC and DLOM in various methods.

Speaker

Robert Schlegel, FASA, MCBA | Principal | Houlihan Valuation Advisors
Penny Lutocka, CPA/ABV, ASA, CFE | Principal | Houlihan Valuation Advisors

Continuing Education

Review of this session recording will award 1.2 CE hour. 

CPE credit is not awarded for this pre-recorded offering.