Mergers & Acquisitions

Resources: Glossary

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Discount for Lack of Marketability

Definition

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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