Discount for Lack of Marketability
An amount or percentage deducted to account for the inability to easily sell the shares of a privately held business and the difficulty in converting those shares to cash.
See Also
Discount for lack of control, valuation discount.
Tips
Discounts and premiums are commonly used when appraising a company for legal purposes. Shares in privately held companies are less liquid and less marketable than shares in publicly traded companies, which are more liquid and readily marketable. The average discount for lack of marketability ranges from 30% to 50%.
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