Private Company Valuation: Market-Based Approach
Assuming only a minority position is offered by the founders of Levante, the total adjustment for the control premium and marketability is _closest_ to:
Yes.
First, calculate the discount for lack of control (DLOC).
$$\displaystyle \mbox{DLOC}= 1- \frac{1}{1+ \mbox{Control Premium}}$$
$$\displaystyle \mbox{DLOC} = 1- \frac{1}{1+0.23} = 0.1870$$
Then adjust for lack of marketability (DLOM) to find the total discount.
$$\displaystyle \mbox{Total Discount} = 1 - [(1 - \mbox{DLOC})\times (1 - \mbox{DLOM})]$$
$$\displaystyle \mbox{Total Discount} = 1- [(1-0.1870)\times (1-0.33)] $$
$$\displaystyle = 0.4553 \approx 46 \%$$
Incorrect.
This answer reflects an incorrect calculation of the control premium (DLOC).
Incorrect.
This answer probably results from incorrectly applying the formula for calculating the total discount.
46%.
48%.
56%.
