# How do you calculate discount for lack of marketability?

Category:
personal finance
options

**The discount for lack of marketability calculation can be based on three different approaches.**

- The first approach uses the price of restricted shares.
- The second approach estimates the DLOM using the price of a put option divided by the stock price, where the put option used is ATM (at the money).

Similarly one may ask, what does discount for lack of marketability mean?

A **Discount for Lack of Marketability** (DLOM) is “an amount or percentage. deducted from the value of an ownership interest to reflect the relative absence. of **marketability**.”

**minority discounts**are usually in the range of 10% to 40%. If a seller is motivated to sell, the purchaser may be able to negotiate a higher

**discount**.

Secondly, what is a valuation discount?

A **valuation discount** refers to the deficiency in value that a buyer estimates for a company compared to its peers in the same industry. Buyers will typically review comparable transactions as part of their due diligence prior to completing an acquisition.

**The following steps would be involved in valuing a partial interest:**

- Value the property in its entirety;
- Calculate the value of the proportionate share in the property by taking the 100% value of the property times the percentage of property owned;
- Determine an appropriate discount for the partial interest;