Convenience has a price — The ins and outs of marketability discounts

Description

Abstract: Marketability discounts capture the inconvenience, time and costs associated with selling a private business interest. This article explains what marketability discounts are and how they work, using a hypothetical example to illustrate. Because such discounts are matters of professional judgment and can vary from one assignment to the next, the article points out that only experienced valuation professionals are equipped to handle them. A sidebar clarifies the difference between marketability and illiquidity discounts.