An analyst valuing the non-controlling shares of a closely held company is using a similar firm quoted on the NASDAQ with relatively high trading volume as his base for a comparable company analysis. He is most likely to use the shates of the publicly traded comparable company and apply a: Marketability discount Minority interest discount A. No No B. No Yes C. Yes No D. Yes Yes
Is the answer D? CP
Comparision made with NASDAQ traded (high liquidity) Closely held company is obviously not exchange traded, so add a Marketability discount for it… non-controlling shares (means monority hold), so add Minority interest discount too… Answer is D?
C?
C bcoz the company we are comparing with does not have a controlling interest either.
C or D, I go with C.
answer should be C. when youre valuing a publicly traded company, its basically, non-controlling, marketable. (public company is non-controlling because you hold a minority interest in it, 1 share of a company means nothing when it comes to control). your private company is non-controlling, non-marketable. so adjust the public company value by the DLOM and that should be it.
the ans is certainly C. I guess I see why D was not the ans. I hope these subtle details will not hunt me during the actual exam…thanks guys
wow, this was a real good question showtyme!! Thanks [A Mistake done here is a mistake not repeated on the exam … Hopefully]