A Managed Asset Portfolio Analysis: Calculating Market-Determined Discounts for Lack of Marketability for Minority Interests in Closely-Held Family Limited Partnerships
AbstractU.S. Courts, and Securities and Exchange Commission (SEC), require appraisal experts to calculate objective, market-based discounts for lack of a market (or marketability) (DLOMs). Appraisals of market value are rooted in Economics and, as such, are inseparably linked to an underlying analysis of market supply and demand. Although economic theory and principles are not absent in Business Valuation theory and practice, a market supply and demand analysis often is only an implicit, and at times an unrecognizable, part of Business Valuation theory and practice. The Managed Asset Portfolio Market (MAPM) Analysis developed in this paper is built upon an explicit economic foundation of market supply and demand, which, in conjunction with relevant market data, provides a reliable market basis for estimating DLOMs for closely-held family limited partnership (FLP) interests that fully satisfies the U.S. Courts’ “gatekeeping” test to be qualified as expert testimony in litigation. The practicing appraiser may discover the MAPM Analysis to be a valuable resource in his valuation work for his appraisal clients.
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Bibliographic InfoPaper provided by University of Connecticut, Department of Economics in its series Alumni working papers with number 2013-02.
Length: 30 pages
Date of creation: Mar 2013
Date of revision:
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Postal: University of Connecticut 341 Mansfield Road, Unit 1063 Storrs, CT 06269-1063
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MAPM Analysis; Closed end fund; CEF; family limited partnership; FLP; DLOM; discount for lack of marketability; discount for lack of a market;
Find related papers by JEL classification:
- D00 - Microeconomics - - General - - - General
- D40 - Microeconomics - - Market Structure and Pricing - - - General
- D46 - Microeconomics - - Market Structure and Pricing - - - Value Theory
- G12 - Financial Economics - - General Financial Markets - - - Asset Pricing
- K00 - Law and Economics - - General - - - General (including Data Sources and Description)
- K41 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior - - - Litigation Process
This paper has been announced in the following NEP Reports:
- NEP-ALL-2013-06-04 (All new papers)
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