Illiquidity Discount
The aggregate term covering any discount applied to a private-company or restricted-stock equity stake to compensate for the lack of a liquid market for the shares. DLOM is the most common specific form; related discounts include the lack-of-control discount (DLOC) for minority stakes in closely-held businesses and the blockage discount for large concentrated positions that cannot be sold without market impact. Aggregate illiquidity discounts on minority private-company stakes routinely exceed 40% when DLOC and DLOM stack.
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Related terms
Ambiguity Aversion · Anchored Assumption · Asset Beta · Bank ROE Spread · Banker Pitch Deck · Beta
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