In this episode of the Forensic Perspectives podcast, host Mark S. Gottlieb gives us an overview of how valuation discounts are used in business valuation, and a detailed look at two primary types: DLOC and DLOM. 

Episode Highlights:

 What are the two primary types of valuation discounts? (0:20)

 What four components is DLOC dependent upon? (0:30)

 Mark discusses investor’s control expectations and control prerogatives. (0:55)

 How do we quantify DLOC? (1:10)

 What is a discount for lack of marketability? (1:25)

 Mark breaks down how a sample valuation would be computed. (2:55)

Key Quotes:

“Control generally has certain prerogatives with it. Some of these are the rights to appoint management, to pay dividends, to direct business strategy, to set compensation and to divest assets.” - Mark Gottlieb

“Marketability is defined as the ability to convert the investment or the business into cash. And generally, that conversion happens in three days or less.” - Mark Gottlieb

 “Often when we're evaluating a controlling interest, we either will not take a discount for marketability, or take a rather modest discount when compared to what would have been used if a minority interest would have been calculated.” - Mark Gottlieb

Resources Mentioned:

Mark S. Gottlieb, CPA, PC (MSG) 

Reach out to Mark S. Gottlieb