There is often more money in dispute in determining the discounts and premiums in a business valuation than in arriving at the pre-discount valuation itself. Discounts and premiums affect not only the value of the company but also play a crucial role in determining the risk involved, control issues, marketability, contingent liability, and a host of other factors that can make or break a deal. It is essential that every appraiser know when discounts and premiums apply and how to quantify them.

Shannon Pratt’s Business Valuation Discounts and Premiums compiles all the key information you need to successfully and accurately determine discounts and premiums in business valuations. It explores the three areas of discounts and premiums–income valuation, market valuation, and the asset approach–explaining how different discounts or premiums may be applicable, depending on the basic valuation approach used, and how each approach can affect the outcome.

Filled with many never-before-published studies, the comprehensive coverage includes:
o Strategic acquisitions
o Extensive empirical data
o Pre-IPO marketability discount studies
o Merger and acquisition negotiations, empirical evidence from completed transactions, and positions taken by courts in litigation
o Strategic acquisitions on premiums
o Studies on minority discounts, available for the first time
o Written by a recognized authority on business valuation, this book will help you master the complex issues and exploit the numerous uses for premiums and discounts to their utmost.



TABLE OF CONTENTS

List of Exhibits
Foreword
Preface
Acknowledgments

1 Overview of Business Valuation Discounts and Premiums and the Bases to Which They Are Applied
2 Minority Discounts and Control Premiums
3 Empirical Data Regarding Minority Discounts and Control Premiums
4 Minority Discounts and Control Premiums in the Courts
5 Discounts for Lack of Marketability for Minority Interests: Concept and Evidence
6 Synopsis of Restricted Stock Studies
7 John Emory Pre-Initial Public Offering Discount for Lack of Marketability Studies - Complete Underlying Data
8 Factors Affecting Discounts for Lack of Marketability for Minority Interests
9 Discounts for Lack of Marketability for Controlling Interests
10 Quantitative Marketability Discount Model
11 Marketability Discounts in the Courts
12 Voting versus Nonvoting Stock
13 Key Person Discounts
14 Discounts for Trapped-in Capital Gains Taxes
15 Blockage Discounts
16 Nonhomogeneous Assets ("Portfolio") Discounts
17 Discounts for Environmental, Litigation, and Other Contingent Liabilities
18 Discount Adjustments for Limited Partnership Interests and Other Asset Management Entities
19 Premium and Discount Issues in Undivided Interest Valuations
20 Common Errors in Applying Discounts and Premiums

App. A: Bibliography
App. B: Data Resources
App. C: Table of Cases
App. D How Much Can Marketability Affect Security Values?
App. E Internal Revenue Service Revenue Ruling 77-287
App. F Securities and Exchange Commission Rules 144 and 144A
CPE Self-Study Examination
Index