Valuation
Discount for Lack of Marketability (DLOM)
A valuation discount applied to private company shares to reflect their illiquidity.
DLOM reflects that private company shares can't be quickly sold — there's no liquid market. Typical DLOM ranges from 15–35% depending on factors like profitability, dividend policy, transfer restrictions, and expected holding period.
DLOM is supported empirically by pre-IPO studies, restricted-stock studies, and option-pricing models. It's heavily scrutinized by the IRS for estate and gift purposes.
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