An analyst valuing the non controlling shares of a closely held company is using a similar firm quoted on the NASDAQwith relatively high trading volume as his base for a comparable company analysis. He is most likely to use the shares of the publicly traded comparable company and apply a Marketability discount Minority interest discount? YES/NO ? YES /NO? WHY?
I say YES to both…Here is my take: Marketability discount because it is a closely held company…so it is hard to disposal/sell than a public traded company. Secondly, minority discount, because he is valuing the non-controlling factor. So this is a discount. If it was controlling shares, that would be a premium.
Thanks map1. Agree with C. Minority interest is a liability. If the firm is having no minority interest liability, then the stock to be as good as what is trading on the exchange. Comment.