GENERATING A PROBABILITY ADJUSTED DISCOUNT FOR LACK OF MARKETABILITY

摘要

A method, system, and medium are provided for generating a probability adjusted discount for lack of marketability (DLOM) for an asset to be valued. A user interface is provided to receive a selection of a number of parameters associated with the asset to be valued and to receive an estimated volatility for the asset's value. A selection of a database containing transaction data associated with previously closed asset sales can also be received. An adjusted mean and standard deviation for transaction periods associated with the selected parameters and the previously closed asset sales is determined. A statistical modeling application provides a log-normal probability distribution of the probability of closing a sale of the asset with respect to time. Time period-specific DLOMs are calculated, weighted based on the probabilities depicted by the distribution, and summed to provide the probability weighted DLOM, which is presented to the user via the user interface.

主权项

1. A computer-implemented method for generating a discount for lack of marketability (DLOM), the method comprising:
storing a population mean transaction period and a population standard deviation of transaction periods of a population of asset sale transactions in a computing device having a processor, the computing device comprising one computing device or a plurality of computing devices communicatively coupled via one or more networks; transforming the population mean and the population standard deviation into a probability distribution of the probability that an asset representative of the population will sell in an amount of time; determining a probability weighted DLOM using a formula and the probability distribution.