Glossary
Private company discount
A reduction applied to a private company’s value, against listed peers, for the lack of a liquid market in its shares.
Also called a discount for lack of marketability (DLOM). Shares in a private company cannot be sold quickly or at a visible price, so investors pay less for them than for equivalent listed shares.
Discounts of 20% to 30% are common in practice. The right figure depends on the company’s size and stage, and on the likely route to liquidity.
In Hebrides
In the Connectd engagement, a 20% to 30% private-company discount set the floor of the revenue-multiple range.
Connectd case study