Independent Analysis of Ownership Interest Discounts

A non-controlling ownership interest may lack the ability to direct company operations, set compensation, control distributions, force a sale, select management, determine strategy, or control the timing and amount of cash flow to owners.

The Valuation Group analyzes the rights attached to the interest being valued, the governing documents, voting power, distribution history, ownership structure, control attributes, and the economic effect of limited control.

Privately held ownership interests often lack an active market. Transfer restrictions, limited buyer pools, company-specific risk, uncertain holding periods, lack of liquidity, distribution policy, and restrictions in shareholder, partnership, or operating agreements may affect marketability.

We evaluate marketability in relation to the specific interest, the company, the expected cash flow, transferability, liquidity, and market evidence relevant to the valuation assignment.

DLOC and DLOM analysis frequently arises in estate and gift tax valuations, charitable contribution valuations, shareholder disputes, buy-sell matters, divorce, partner exits, family entity transfers, and ownership planning.

The Valuation Group prepares discount analyses designed to support the value conclusion in the context of the matter, the applicable law or agreement, and the professional review expected.

In contested matters, discount conclusions are often a focal point of disagreement. We review opposing valuation reports, discount assumptions, empirical support, level-of-value issues, marketability conclusions, control adjustments, and the relationship between the discount and the facts of the ownership interest.

Our work helps counsel, CPAs, trustees, executors, and advisors evaluate whether a discount conclusion is supportable or vulnerable to challenge.