The purpose of this post is to suggest that the key person discount, like many valuation questions and issues, can and should be examined in the context of expected cash flows, their growth, and the risks associated with achieving them.

Should business appraisers normalize excess owner compensation and perquisites, or agency costs, to market levels for similar services when valuing a non-controlling subject interest? In this post we discuss the answer to this question and the logic behind it. This post will be controversial for some readers, but we believe after reading it, you will agree.

This sixth post in a series on restricted stock discounts begins and ends by referencing all previous posts. The focus today is on the expected holding period premium, the key difference between restricted shares and otherwise identical publicly traded shares of restricted stock issuers. We discuss the reasons for restricted stock discounts and illustrate the calculation of expected holding period premiums implied by a sample restricted stock transaction.

RSD-5 is the fifth in a series of posts on the restricted stock discount. We look at the importance in the similarities and differences between restricted shares and freely traded shares for the individual publicly-traded issuers of restricted stock.

RSD-4 is the fourth in a series of posts on the restricted stock discount. This post addresses what valuation discounts (or premiums) are supposed to do, and then examines the restricted stock discount in the context of valuation ratios. In short, restricted stock discounts, or averages of them, cannot be used as valuation ratios for purposes of developing marketability discounts. This will be disquieting to many valuation analysts, but it is simply true.