Minority Discount

A reduction applied to the value of a minority ownership interest to reflect the holder's inability to influence key business decisions such as dividend policy, asset sales, or management appointments. DLOC is the inverse of the control premium and is typically derived from observed control premium data in comparable transactions.

A reduction applied to the pro rata value of a business to reflect the disadvantages of owning a non-controlling interest, including inability to direct business strategy, set compensation, force distributions, or compel liquidation. The minority interest discount is the mathematical complement of the control premium and is typically applied when valuing interests of less than 50% in private companies.

A reduction applied to the value of an ownership interest to reflect the absence of a ready market for its sale. DLOM is commonly applied to interests in private companies where shares cannot be easily traded on a public exchange.

A reduction applied to the value of an ownership interest to reflect the lack of a ready market in which to sell the interest quickly and at full value. Also known as a discount for lack of marketability (DLOM), this adjustment is particularly significant for private company valuations where shares cannot be readily traded on a public exchange.

A discount rate that incorporates a premium reflecting the specific risks associated with a particular asset, cash flow stream, or investment. In intangible asset valuations, risk-adjusted discount rates are typically higher than the weighted average cost of capital to reflect the greater uncertainty inherent in intangible asset cash flows compared to tangible assets.

A reduction to business value reflecting the risk that the departure of one or more critical individuals would materially impair the company's earnings, relationships, or operational capability. Key person discounts are most significant in professional services, early-stage ventures, and founder-led businesses where revenue concentration or specialised expertise is tied to specific individuals.

The phenomenon where the market values a diversified conglomerate at less than the aggregate value of its individual business units if they were operated independently. The conglomerate discount — typically estimated at 10% to 15% — reflects investor concerns about capital allocation inefficiency, cross-subsidisation, management complexity, and reduced transparency across disparate business lines.

A legally binding contract between a company's shareholders that governs their rights, obligations, and the rules for key decisions including share transfers, board composition, dividend policy, and exit mechanisms. Essential governance infrastructure for investor-backed companies.

What is the Relief from Royalty method?

The Relief from Royalty (RFR) method values an intangible asset by estimating the royalty payments a company avoids by owning the asset rather than licensing it from a third party.

What is the weighted average cost of capital (WACC)?

WACC is the average cost of all capital sources (debt and equity) a company uses, weighted by their proportions — it is the minimum return the company should generate to satisfy all investors.

What is the Greenfield method and when is it used for intangible valuation?

The Greenfield method values an intangible asset by modelling the cash flows of a hypothetical start-up business that owns only that single asset and must build everything else from scratch.