Defining, Measuring & Defending Discounts for Lack of Liquidity
Featuring Ashok Abbott of Business Valuation, LLC, Shannon Pratt of Shannon Pratt Valuations, and Rob Schlegel of Houlihan Valuation Advisors
Telephone Dial-In Audio Conference
Wednesday, April 25, 2007
10:30am-12:10pm PDT / 11:30am-1:10pm MDT / 12:30pm-2:10pm CDT / 1:30pm-3:10pm EDT
Presented by Business Valuation Resources, LLC
Earn TWO INTERACTIVE CPE credits for participating in this conference
PRICE: $249.00 for a single dial-in connection. Use your conference room and the whole office can listen in. Two CPE credits are available for each additional listener sharing the same phone connection - only $49.00 per person.
Why You Should Attend:
Don't miss Ashok Abbott, Shannon Pratt, and Rob Schlegel as they discuss and debate all key issues of illiquidity. You will walk away with hands-on guidance on applying discounts for lack of liquidity.
Learn the distinguishing features between liquidity and marketability
Learn how to measure discounts for lack of liquidity and the cost of going public
Learn how to apply our model using recent court cases
Learn how to utilize this area's new research in your practice
Defining, Measuring & Defending Discounts for Lack of Liquidity Presentation:
Introduction, Trends & Concepts
- Levels of Value
- Discount Landscape
- Core Concepts
- Marketability & Liquidity: What’s the Difference?
- Liquidity Differences within Marketability Classes
Publicly Traded Equivalent Value
- Liquidity Assumptions of the Publicly Traded Equivalent Value
- Core Issue in Liquidity: Immediacy
- Effect of Liquidity on Security Pricing & Returns
- Bid-ask Spread & Liquidity
- Recent Changes in Market Liquidity
- Changes in Market Liquidity & Private Companies
- Market Profile : Large Stocks
- Market Profile: Small Stocks
- Security Markets Liquidity
Holding Period Vs. Liquidation Period
- Holding Period
- Liquidation Period
- Discount for Lack of Liquidity
- Mean Liquidation Period: Small Firms
- Mean Liquidation Period: Large Firms
- Price Pressure
- Market Failure
- Price Risk
Marketability Discount Approaches
- Empirical Studies
- Quantitative Marketability Discount Model
- Is Bajaj Right?
- Put Option Based Models
- Look Back Put
Issues for Consideration
- Abbott Index: Cost of IPO and DLOL
- Marketability: Cost of IPO
- Qualitative Costs of an IPO
- Reported Costs of an IPO
- IPO Sample Results
- IPO Costs: Explanatory Factors
- Regression Results: IPO Costs
- Average Market Capitalization for Decile Rankings
- Cost of IPO: Example
Cost of Liquidity: Discount for Lack of Liquidity
- Longstaff Look Back Put
- Block Size and DLOL
- Large-Firm DLOL Estimation
- Small Firm DLOL Estimation
Applying the Theories
- Tax Cases Phase I
- Tax Cases Phase II
- Where Do We Go From Here?
Audience Questions and Concluding Remarks
Ashok B. Abbott is Associate professor of Finance at West Virginia University, Morgantown, West Virginia. He has also taught at the Graduate school of Credit and Financial Management held at Dartmouth and Stanford University.
Dr. Shannon Pratt is a managing member of Shannon Pratt Valuations, LLC and is the founder of Business Valuation Resources, LLC. He is also one of the founders of Willamette Management Associates and was a managing director of Willamette for almost 35 years.
He has performed valuation assignments for the following purposes: transaction (acquisition, divestiture, reorganization, public offerings, public companies going private), taxation (federal income, gift, and estate and local ad valorem), financing (securitization, recapitalization, restructuring), litigation support and dispute resolution (including dissenting stockholder suits, damage cases, and corporate and marital dissolution cases), and management information and planning. He has also managed a variety of fairness opinion and solvency opinion engagements.
Dr. Pratt has performed business and stock appraisals in the following industries: accounting and consulting, advertising, aluminum, apparel, appraisal, architecture and engineering, automobile distributors and dealerships, automobile parts manufacturing, automobile repair and servicing, aviation, banking, bottling, breweries, brokerage, concrete, chemical, computer services, construction and contracting, consumer finance, distribution, education, entertainment, fast food, food service, forest products, funeral homes, health care, hotel and hospitality, insurance, leasing, manufacturing, medical and dental practice, mining and mineral extraction, petrochemical, printing, publishing, radio broadcasting, railroads, real estate development, recreational services, restaurant, retailing, ship repair, shipping, steel, telecommunications, television broadcasting, textile manufacturing, transportation and trucking, utilities, wholesaling, and wineries.
Dr. Pratt has testified on hundreds of occasions in such litigated matters as dissenting stockholder suits, various types of damage cases (including breach of contract, antitrust, and breach of fiduciary duty), divorces, and estate and gift tax cases.
Robert C. Schlegel, ASA, MCBA, works closely with Houlihan Smith & Company on complex financial opinions and financings and is a Principal with Houlihan Valuation Advisors. Rob's professional background includes extensive work in business appraisal, marital and partnership dissolutions, estate planning, market studies, statistical analysis, and forensic accounting. He has testified as an expert in Federal and Indiana courts and has directed numerous studies of business value, lost profits, pension and stock option issues, and intellectual property matters.
2 Interactive CPE Credits (Consulting Services)
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