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Business Valuation Discounts and Premiums

The following guide provides information on books and publications which focus on business valuation discounts and premiums. Each entry listed below includes the name of the source or publisher, a brief description of the resource and its features, and notes any information that is available free online.

Select from the following resources:

Business Valuation Discounts and Premiums, 2nd Edition
Shannon P. Pratt, Wiley, 2009

Comprehensive text provides a detailed analysis of business valuation discounts and premiums, with topics covered in the text including minority interest discounts, control premiums, lack of marketability discounts, key person discounts, portfolio discounts, and discounts for trapped-in capital gains taxes, and includes a discussion of common errors encountered in applying these discounts and premiums.

BVR's Guide to Discounts for Lack of Marketability
Business Valuation Resources, LLC, updated annually

Two-volume publication offers practical guidance on determining a discount for lack of marketability, with topics covered in individual chapters including restricted stock studies, private placements, and private investments in public equity (PIPEs); pre-IPO studies; other minority public stock evidence; private company discounts; factors affecting the DLOM discount; and comparative factor analysis.

Discount for Lack of Marketability: Job Aid for IRS Valuation Professionals
Internal Revenue Service, 2009

Comprehensive publication was prepared to help IRS valuators understand the various studies and approaches used by valuation professionals in determining a discount for lack of marketability, and includes commentary on the strengths and weaknesses of each approach, the prevalence of the approach in practice, and what the courts have said about the approach in various case decisions.

FMV Restricted Stock Study
FMV Opinions, Inc.

Subscription database provides an online interactive tool for quantifying lack of marketability discounts based on restricted stock transaction data, with user-defined selection criteria including industry code, transaction date, trading exchange, registration rights, holding period, block size, market value, total assets, total revenues, net profit margin, and dividend yield. Sample reports are available free online.

Valuation Advisors Lack of Marketability Discount Study
Valuation Advisors, LLC

Online database compares initial public offering (IPO) stock prices to pre-IPO prices and is searchable by industry code, business description, total revenues, total assets, operating income, operating profit margin, IPO date, transaction date, transaction type, and pre-IPO timeframe.  Database is continually updated and contains over 12,000 pre-IPO transactions. Selected sample data is available free online.

QMDM Companion, Version 4.0
Mercer, Mercer Capital, 2008

Quantitative Marketability Discount Model (QMDM), Version 4.0 features a rate-of-return-based Excel spreadsheet model which uses present value analysis to quantify a discount for lack of marketability, and also includes an explanatory text excerpted from "Business Valuation: An Integrated Theory, 2nd Edition" and a test section which allows users to test the sensitivity to changes in key assumptions.

Factset Mergerstat® Review
FactSet Mergerstat, LLC / Business Valuation Resources, LLC, annual

Annual publication provides a detailed analysis of mergers and acquisitions, corporate divestitures, and management buy-outs involving interests in public and private companies, with data provided on an industry level including target company pricing multiples and control premiums offered. Selected excerpts from the print edition of this publication and a sample monthly update are available online.

Factset Mergerstat® / BVR Control Premium Study
FactSet Mergerstat, LLC / Business Valuation Resources, LLC

Online searchable database provides transaction detail on mergers and acquisitions, private equity deals, and corporate takeovers and buy-outs involving controlling interests in public companies, with data provided—including target company pricing multiples, control premiums, and implied minority discounts—searchable by industry, annual revenue, earnings, deal size, and other selected criteria.

Executive Summary Report on Partnership Re-Sale Discounts
Partnership Profiles, Inc., annual

Annual report provides detailed analysis of the price-to-net-asset-value discounts at which real estate limited partnership interests trade in the secondary market, with partnership categories analyzed on a current and historical basis including equity distributing with low to no debt, equity distributing with moderate to high debt, equity nondistributing, undeveloped land, triple-net-lease, and mortgage loan.

Partnership Profiles Minority Interest Discount Database
Partnership Profiles, Inc., annual

Online database provides secondary market transaction data and historical financial information for more than 385 real estate limited partnerships, with data provided as part of this package including the Executive Summary Report on Partnership Re-Sale Discounts, summary data for partnerships included in this report; and a CD-ROM with detailed financial reports for hundreds of partnerships.

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