Blockage discounts: They’re all about supply and demand
Abstract: When valuing a business, an appraiser often establishes discounts for lack of control and marketability. In some instances it’s not a company but large blocks of public stock that must be valued. In such cases, the valuator is likely to employ a discount for blockage — especially if the stock has limited trading volume, for blockage discounts are based on the law of supply and demand. This article explains how appraisers determine blockage discounts.