Discount for Lack of Marketability (DLOM)

Definition

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. Empirical studies, including restricted stock studies and pre-IPO transaction studies, typically suggest DLOMs ranging from 15% to 35%, though the appropriate discount depends on factors such as expected holding period, dividend policy, and prospects for a liquidity event.