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Mergerstat Industry Analysis
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| 2005 Mergerstat Industry Analysis Construction, Contractors, & Engineering Services Control Premium 53.9% Minority Discount 35.0% Page 117 of 141 represent anon marketable value. Therefore, a Discount for Lack of Marketability (“DLOM”) was not required for the estimate of value derived using the Direct Market Data Method. However, the value estimates calculated by applying the principles of the Single Period Capitalization Method under the Income Approach and the Adjusted Book Value Method including the use of the Excess Earnings Method under the Asset Approach were based in large part on the development of a capitalization rate, which was in turn derived from public data regarding marketable (or as if freely traded) securities and other financial products. This public data (primarily publicly traded stocks) has an element of liquidity that closely‐held shares do not have. Therefore, in this case, a DLOM adjustment is required in order to restate the estimate of value produced by the Single Period Capitalization Method Income Approach, and the Adjusted Book Value Method including Excess Earnings Method (Asset Approach. Although subjective in application, there is more available information regarding DLOMs than there is for DLOCs in the case of closely‐held companies. The following section discusses the basis and development of an appropriate DLOM for this subject interest. Download 0.84 Mb. Share with your friends:
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