Quantifying the Private Company Discount: Multiples Approach and Acquisition Approach

Private company valuation is typically performed by BV professionals who regularly estimate the value of nonmarketable interests. In order to develop a valuation estimate, BV professionals review and interpret empirical evidence to support decision making. For example, for the valuation of nonmarketable interests—within the context of a fair market value business valuation—there is typically a valuation consideration related to the discount for lack of marketability (DLOM). That valuation consideration is often based on empirical data as interpreted and applied by a BV professional.