Scribd
Upload
180 views4 pages

Illiquidity Discounts Analysis

The document provides inputs and outputs for calculating illiquidity discounts for private companies. It includes a base discount of 25% for a profitable firm with $10 million in revenues. For a company with $209 million in revenues and 100% of stock outstanding for sale, the illiquidity discount is calculated to be 19.10%. A second calculation is shown for a private company with $209 million in revenues, positive earnings, 3% cash/value, and 0% trading volume/value, resulting in an illiquidity discount of 11.78%. A chart displays illiquidity discounts across a range of revenue levels for both profitable and unprofitable private firms.

Uploaded by

Pro Resources
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as XLS, PDF, TXT or read online on Scribd

Topics covered

  • Firm Revenue,
  • Valuation Standards,
  • Trading Volume,
  • Revenue Growth,
  • Earnings Impact,
  • Financial Analysis,
  • Cash Value,
  • Investment Returns,
  • Investment Valuation,
  • Profitability Analysis
180 views4 pages

Illiquidity Discounts Analysis

The document provides inputs and outputs for calculating illiquidity discounts for private companies. It includes a base discount of 25% for a profitable firm with $10 million in revenues. For a company with $209 million in revenues and 100% of stock outstanding for sale, the illiquidity discount is calculated to be 19.10%. A second calculation is shown for a private company with $209 million in revenues, positive earnings, 3% cash/value, and 0% trading volume/value, resulting in an illiquidity discount of 11.78%. A chart displays illiquidity discounts across a range of revenue levels for both profitable and unprofitable private firms.

Uploaded by

Pro Resources
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as XLS, PDF, TXT or read online on Scribd

Topics covered

  • Firm Revenue,
  • Valuation Standards,
  • Trading Volume,
  • Revenue Growth,
  • Earnings Impact,
  • Financial Analysis,
  • Cash Value,
  • Investment Returns,
  • Investment Valuation,
  • Profitability Analysis

Inputs

BaseDiscountforfirmwith$10millionrevenue 25%
Revenues= 209
Sizeofblockas%ofstockoutstanding= 100%
PositiveorNegativeEarnings= 1

Output
IlliquidityDiscount 19.10%
Inputs
Values for Private company
Revenues 209
PositiveorNegativeEarnings= 1
Cash/Value 3%
Trading Volume/ Value 0%

Output
Illiquidity Discount = 11.78%
Figure24.1:IlliquidityDiscounts:BaseDiscountof25%forprofitablefirmwith$10millioninrevenues

40.00%

35.00%

30.00%

25.00%
Discountas%ofValue

20.00%

15.00%

10.00%

5.00%

0.00%
5 10 15 20 25 30 35 40 45 50 100 200 300 400 500 1000

Revenues

Profitablefirm Unprofitablefirm
Revenues Profitable firmUnprofitable firm
5 26.26% 34.21%
10 25% 33.15%
15 24.25% 32.52%
20 23.71% 32.07%
25 23.29% 31.72%
30 22.94% 31.42%
35 22.64% 31.17%
40 22.39% 30.96%
45 22.16% 30.77%
50 21.95% 30.59%
100 20.59% 29.45%
200 19.19% 28.27%
300 18.35% 27.57%
400 17.75% 27.06%
500 17.28% 26.67%
1000 15.79% 25.42%

You might also like