Transcription of Quantifying the Private Company Discount: …
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JANUARY 2015 Vol. 16, Issue No. 1 Reproduced with permission from Business Valuation Alert, published and copyrighted by Wolters Kluwer 2700 Lake Cook Road, Riverwoods, IL 60015 Quantifying the Private Company discount : Multiples Approach and Acquisition ApproachBy Kevin M. Zanni, ASA, CBA, CVA, CFEI ntroductionPrivate Company valuation is typically performed by BV professionals who regularly estimate the value of nonmar-ketable interests. In order to develop a valuation estimate, BV professionals review and interpret empirical evidence to support decision making. For example, for the valuation of nonmarketable interests within the context of a fair mar-ket value business valuation there is typically a valuation consideration related to the discount for lack of marketability (DLOM). That valuation consideration is often based on em-pirical data as interpreted and applied by a BV professional. Empirical data is primarily derived from equity studies.
3 The Kooli study recognized the Koeplin study’s weak-nesses and attempted to control for these weaknesses. In general, the Kooli study used similar procedures to
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