Valuation Glossary

Discount for Lack of Marketability (DLOM) refers to the reduction in the value of an investment because it is not easily sold or traded on the market. When an investment is hard to sell quickly or at a fair price, it becomes less attractive to buyers. This discount is applied to account for the difficulty in converting the investment into cash. Factors like the absence of an established market, legal restrictions, or limitations on transferability can contribute to a lack of marketability. The DLOM is a percentage reduction from the estimated fair market value and compensates buyers for the risks and extra effort associated with owning an illiquid investment.

Discount for Lack of Control (DLOC) is a reduction in the value of a minority ownership stake in a company or asset because the owner has limited control over decision-making. When someone holds a minority stake, they may not have a say in important business decisions. The DLOC reflects this lack of control and is applied when valuing the ownership interest. It considers factors like the size of the stake, the control held by majority owners, and market conditions. The discount compensates buyers for the risks and limitations of owning a minority stake, as controlling interests are typically more valuable.

Discontinued operations refer to parts of a company's business that have been sold, disposed of, or otherwise terminated.

Determining the acquisition date involves identifying the specific date when a company gains control over an acquired asset or business. This date is critical for accounting purposes, as it affects how the acquisition is recorded in the company's financial statements and when the company starts recognizing any related revenue, expenses, or liabilities.

Deferred taxes refer to the tax liabilities or assets that a company recognizes due to differences between the accounting treatment of income and expenses and their treatment for tax purposes. These differences can arise because certain items are recognized in one period for accounting purposes but in another period for tax purposes.