Following "Mercer's Musings" 1-3, Mercer's Musing #4 examines the guidance found in "Procedural Guideline -2 (PG - 2) Valuation of Partial Ownership Interests" in the ASA Business Valuation Standards. Procedural Guidelines (PG) are designed to provide more detailed guidance for consideration by business appraisers than found in the base standards themselves. There is a great deal more to valuing illiquid minority interests than "guessing" at a marketability discount based on vague referenc...| Chris MercerChris Mercer
In Mercer's Musings #3, I address this basic quantitative derivation of marketability discounts for Companies A and B. As valuation is a function of expected cash flows, growth, and risk, any methodology failing to account for these factors is inadequate. Through a hypothetical comparison of two identical corporations with differing minority interests, I emphasize the value of a nuanced approach to valuation, suggesting that reliance on outdated averages from restricted stock studies is insuf...| Chris MercerChris Mercer
In "Mercer's Musings #2," the focus shifts to the examination of restricted stock studies and their application in determining marketability discounts for gift and estate tax appraisals, offering valuable insights for appraisers across all credential spectrums. Highlighting the inherent challenges of such studies, I underscore the lack of economic relevance these studies hold in contemporary valuation scenarios, particularly emphasizing their disconnect with current private company valuations...| Chris MercerChris Mercer
Many years ago, I wrote a column for the Business Valuation Review that the editor, Jay Fishman, FASA, called "Mercer's Musings." In this blog and with this post, I reintroduce "Mercer's Musings" because I would like to reflect on a number of seemingly unsettled issues in the business valuation world. This first musing relates to the need (or not) to comply with the Uniform Standards of Professional Appraisal Practice promulgated by The Appraisal Foundation in gift and estate tax appraisals p...| Chris Mercer
