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How to realize big benefits from a holding company discount

Oct 21, 2019 · A holding company discount comes into play when holding companies sell assets or break themselves up into their constituent parts. In other words, holding companies can usually sell their assets for fair market value, rather than at a discount. In addition, fair market value may turn out to be more than analysts figured they were worth.…

Factors Affecting Discounts in Valuing Asset-Holding ...

Valuation professionals are often asked to determine the value of fractional interests in asset-holding companies. These entities are commonly structured with a general partner, managing member or voting shareholder who has a small percentage ownership interest as well as exclusive control of the day-to-day business of the enterprise.…

Holding Company Discount (Part 1) Hiding in Plain Sight

Jan 04, 2015 · Are Holding Company Discounts to Net Asset Value Justified (Part 1) In the life of a value investor you will likely uncover multiple holding companies trading at a discount to Net Asset Value (“NAV”). For a long time I have applied a rule of thumb 20% discount to NAV as in-built into the fair value equation...…

Valuation of a Holding Company – Not as Simple as it Seems ...

The valuation of a holding company would typically take the form of an asset approach. Assuming the holding company is a going concern (i.e., does not appear to be in distress and will not declare bankruptcy in the foreseeable future), the valuation is calculated by taking the fair market value of assets, net of the fair market value of liabilities at the valuation date.…

Marketability Discounts, Fair Value and the Forgotten ...

Company A holds a marketable security with a fair value of $100, and Company B holds the same security, except that it is nonmarketable or restricted from sale for two years. Company B has taken a 20% DLOM (i.e., the fair value recorded is $80). After two years, the fair value of the non-marketable security will equal that of the marketable security.…

Valuation Discounts for Estate and Gift Taxes

The market method (also referred to as the comparable sales method) compares the closely held company with its unknown stock value to similar companies with known stock values. The income (or discounted cash flow) method discounts to present value the anticipated future income of the company whose stock is being valued.…