Business Valuation · Discount Analysis · USPAP Compliant
Prepared for
Axria
Case Studies

Discount valuations for minority interests, LP positions, and IRA conversions

Three recent engagements illustrating how we value closely held entities and apply discounts for lack of control (DLOC) and lack of marketability (DLOM). Each engagement resulted in a full report of 60+ pages, supported by published discount studies and prepared for IRS fair market value reporting.

◆  Client names, entity names, locations, and dollar values have been generalized to protect confidentiality. Discounts are shown as ranges.
◆  For illustrative purposes only. Every figure on this page, including discount ranges, is an approximation based on past engagements. None are the exact conclusions of any single report, and none are an indication or prediction of the outcome of any future valuation.
EngagementPurposeApproachDLOCDLOMTotal Effective Discount
Pre-development land holding Estate & gift planning Net asset value 25–40% 10–30% 45–55%
Ground-up multifamily development Estate & gift planning Income (DCF) 20–35% 10–30% 40–50%
Pre-IPO fund LP interest Roth IRA conversion Net asset value 25–40% 10–25% 40–50%
Case Study 01

Minority interest in a pre-development land holding entity

Pre-Development Stage
Subject Interest
Minority membership units in a single-asset LLC
Underlying Asset
100+ acre undeveloped land tract (Southeast US) with nominal lease income and no structures
Valuation Approach
Net asset value: third-party real estate appraisal less outstanding debt, then discounted at the interest level
Report Use
Fair market value support for estate and gift planning

Discount for Lack of Control

25–40%
  • No distributions, with none anticipated; net asset yield under 1%
  • Benchmarked against published non-distributing partnership data and closed-end fund discounts
  • Portfolio concentration in one non-income-producing asset
  • Restrictions on disposition; shallow management depth
  • Offset: small member group simplifies coordination
■ Amber items reduced the discount

Discount for Lack of Marketability

10–30%
  • Pre-revenue asset with no performance history
  • No market for units; severe transfer restrictions
  • Very long expected holding period with no distribution offset
  • Material debt against a non-income-producing asset
Total effective discount45–55%
Case Study 02

Non-voting minority interest in a completed ground-up multifamily development

Ground-Up Real Estate
Subject Interest
Minority, non-voting membership units in a single-asset LLC
Underlying Asset
Newly delivered multifamily property (Southeast US), developed ground-up over multiple years, in initial lease-up at the valuation date
Valuation Approach
Income approach: discounted cash flow on debt-free net cash flow with a market-derived WACC and terminal growth rate
Report Use
Fair market value support for estate and gift planning

Discount for Lack of Control

20–35%
  • All decisions reserved to a majority of the voting class; subject units carry no vote
  • Benchmarked against published partnership and closed-end fund discount data for leveraged, distributing entities
  • Single-asset concentration and thin management depth
  • Offset: small member group simplifies coordination
■ Amber items reduced the discount

Discount for Lack of Marketability

10–30%
  • No established operating history; property still in lease-up
  • Significant leverage on a single asset
  • Severe transfer restrictions in the operating agreement; no market for units
  • Long expected holding period
  • Offset: prospective rental income supports future distributions
■ Amber items reduced the discount
Total effective discount40–50%
Case Study 03

Minority LP interest in a pre-IPO venture feeder fund

IRA Conversion
Subject Interest
<2% limited partner interest
Underlying Asset
Single-purpose fund holding preferred shares of one late-stage private company
Valuation Approach
Net asset value from the fund's capital account statement, then discounted at the interest level
Report Use
Fair market value support for a traditional-to-Roth IRA conversion

Discount for Lack of Control

25–40%
  • LPs hold zero management or voting rights; all authority rests with the GP
  • Transfers require GP consent in its sole discretion
  • No withdrawal or redemption rights
  • Single-asset portfolio concentration
  • Small, key-person-dependent management team
  • No yield; benchmarked against closed-end funds with comparable concentration

Discount for Lack of Marketability

10–25%
  • No public market for LP interests; severe contractual transfer restrictions
  • No distributions until a liquidity event at the underlying company
  • Supported by restricted stock and pre-IPO studies plus a full Mandelbaum factor analysis
  • Offset: strong secondary demand for the underlying company and a credible near-term IPO path compressed the holding period
■ Amber items reduced the discount
Total effective discount40–50%