BV191 How to Determine Discounts for Lack of Marketability
Business appraisers have historically used comparisons to the averages found in restricted stock studies to determine discounts for lack of marketability in their appraisals of a privately held, noncontrolling interests. While the average discounts from restricted stock studies are useful and indicate that discounts for lack of marketability do occur in arm’s length transactions, more analysis is needed to apply the underlying data to the valuation of privately held minority interests. This 1 hour webinar will review the top methods used to determine discounts for lack of marketability and provide practical objective methodologies for listeners to consider to calculate discounts that can be supported by more than pointing to an average in a study.
CPAs, attorneys, and business valuation professionals
Bruce Johnson, ASA | Munroe, Park & Johnson, Inc.
Bruce A. Johnson, ASA is a partner with Munroe, Park & Johnson. He holds a degree in Engineering and MBA from Texas A&M University. Mr. Johnson has been published on a wide range of valuation topics in several periodicals including the Texas Bar Journal, Business Valuation Update, Business Valuation Review, CCH BV Update, Texas Lawyer and Strategic Planning. He is also a contributing author for PPC’s Guide to Business Valuation and a co-author of the Comprehensive Guide for the Valuation of Family Limited Partnerships. He was the expert witness for the taxpayer in two land mark tax cases – Estate of Elsie J. Church and Estate of Emily Klauss. Mr. Johnson is an Accredited Senior Appraiser of the American Society of Appraisers (ASA) and elected member of the ASA’s Board of Governors. He has spoken at seminars, conferences and webinars for the AICPA, ASA, NACVA and Partnership Profiles.
Upon webinar completion, the participant will be able to:
- Understand why discounts for lack of marketability occur;
- Develop a knowledge of the leading edge techniques for calculating DLOMs;
- Determine and evaluate what data is available to support DLOMs;
- Learn why the rate of return of an investment is more important than the total discount;
- Learn how investors value publicly held limited partnership interests in arm’s length transactions?; and
- Quantify, calculate and defend a discount for lack of marketability.