Deja Vu: Revisiting the Restricted Stock and Pre-IPO Studies

Co-Sponsored by the National Association of Certified Valuators and Analysts®  (NACVA®) 

	Program Description		Who Should Attend
	How You Will Benefit		Schedule

Program Description
Chris Mercer revisits the restricted stock and pre-IPO studies that are frequently used to quantify discounts for lack of marketability (DLOM).

For decades, valuation professionals have relied on restricted stock and pre-IPO studies to estimate DLOM. In this course, Chris challenges their credibility as the primary method to derive DLOM and proposes a more thoughtful, theoretically grounded alternative.

Drawing from Mercer's “Déjà Vu” series, this course examines the historical evolution of DLOM analysis, critiques the continued sole reliance on dated studies, and presents the Quantitative Marketability Discount Model (QMDM) as a quantitative alternative or complement.

This course provides a comprehensive update on current best practices for quantifying marketability discounts and challenges participants to elevate the analytical rigor of their DLOM determinations.

How You Will Benefit
After completing this course, attendees will be able to:

• Describe the historical basis and limitations of restricted stock and pre-IPO studies used in DLOM analysis
• Identify the weaknesses of these studies
• Recognize how valuation theory for entire businesses parallels the theory for valuing illiquid minority interests
• Explain the structure and application of the QMDM
• Assess how dividends, expected holding periods, and incremental risk premiums influence the valuation of minority interests
• Design and improve the credibility of DLOM conclusions

Take Aways
This course challenges long-held beliefs about how DLOMs should be determined, calling for a shift away from sole reliance on restricted stock or pre-IPO studies. The QMDM, a shareholder-level DCF model, is a quantitative alternative or complement to the studies. Every appraiser should be familiar with it and this presentation will walk you through it. Attendees will be better able to defend their marketability discount conclusions with greater analytical rigor and confidence.

Who Should Attend

Delivery Method Group Internet-Based Program Level Advanced Advanced Preparation None Prerequisites Previous training or experience with the fundamentals of accounting, finance, economics, and business writing. These individuals are often at the staff or entry level in organizations, although such programs may also benefit a seasoned professional with limited exposure to the area.    Economics 2 Total CPE Hours   2

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