123ArticleOnline Logo
Welcome to 123ArticleOnline.com!
ALL >> Business >> View Article

Uses Of Valuation Discounts In Business Valuation

By Author: bhumi
Total Articles: 6

There are two primary instances in which Valuation Discounts are used. These include entity or shareholder level discounts. Entity-level discounts affect the business as a whole while the shareholder level discounts affect certain ownership interest holders.
DISCOUNT FOR LACK OF CONTROL

When estimating the value of an ownership interest, typically controlling ownership interests sell at a higher value than non-controlling ownership interests. There are many reasons as to why a controlling interest in a business is generally worth more on a pro-rata basis than a minority position. Generally a controlling interest can confer the rights to the following:

Elect directors
Select and/or remove management
Dictate dividend policies
Determine compensation and benefits
Acquire and sell assets
Determine corporate strategy and long-term goals
Acquire other companies or merge with other companies
Revise articles of incorporation and bylaws

DISCOUNT FOR LACK OF MARKETABILITY

Owners of closely held businesses are affected by the inability to readily convert their investment into cash. The term discount for lack of marketability is a general term referred to in Business Valuation for the impairment of value for reasons relating to liquidity. There is no quantitative formula to apply a discount for lack of Marketability to a privately held company. A valuation analyst will review several aspects of the business and organizational documents to determine if a discount for lack of marketability is appropriate.

Total Views: 17Word Count: 245See All articles From Author

Business Articles

1. The Best Way To Best Finance Courses
Author: ponting brown

2. Union Packers And Movers India In Bangalore Charges
Author: Google

3. Things You Should Seek In Your Building Supplies Melbourne
Author: Lucas Smith

4. Leslie Waterworks Purification Technology
Author: Leslie WaterWorks

5. Home Water Cooler New York
Author: Leslie WaterWorks

6. Construction Sector To Push The Acoustic Sealants Market Revenue To $1.6 Billion By 2023
Author: Ankur

7. Wedding Rings Melbourne
Author: Wedding Rings Melbourne

8. Dlf Promenade - Places To Visit In Delhi For Kids
Author: DLF Promenade

9. 7 Tips For Road Safety On Long Haul Mc Truck Jobs From Sydney
Author: 1800 Drivers

10. Top Material Handling Equipment Company- Ace Cranes
Author: acecranes

11. Asset Recovery Services
Author: Asset Recovery Services

12. Hr Is Pivotal To Human Capital Management
Author: NetZealous LLC, DBA TrainHR

13. Best Seo Agency In The World
Author: Jagjit Kaur Rattanpal

14. Ways To Generate B2b Sales Leads
Author: Jagjit Kaur Rattanpal

15. Togbok: Rapidly Talk With Friends
Author: barry

Login To Account
Login Email:
Password:
Forgot Password?
New User?
Sign Up Newsletter
Email Address: