VALUATION DISCOUNTS AND PREMIUMS

Fundamentals, Techniques & Theory VALUATION DISCOUNTS AND PREMIUMS . CHAPTER SEVEN. VALUATION DISCOUNTS AND. PREMIUMS . Democracy is the recurrent suspicion that more than half of the people are right more than half of the time.. E. B. White (1899 1985). Columnist, New Yorker, July 3, 1944. Author: Stuart Little; Charlotte's Web I. OVERVIEW. Determination of the value of an equity interest requires the VALUATION practitioner to carefully scrutinize the specific investment characteristics inherent in the specific equity instrument. Knowledge of these investment characteristics is critical for a proper risk assessment and, thereby, producing a conclusion of value that addresses these risks. In addition to understanding the investment characteristics of a specific equity instrument, it is equally important that the VALUATION practitioner understand the mechanics of the many commonly used VALUATION methodologies under the three broad VALUATION approaches (income, market and asset- based).

A. OTHER DISCOUNTS Other value modifications beyond those considering control and marketability often include: 1. Market absorption and blockage discounts 2. Key person/thin management discounts 3. Investment company discount 4. Information access and reliability discount 5. Lack of diversification discount 6. Non-homogenous assets discount 7.

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  Value, Market, Premium, Valuation, Discount, Blockage, Valuation discounts and premiums, And blockage discounts

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