This is the third post in a series on restricted stock discounts. We address the economics of the expected holding period premium over public company issuer discount rates that causes the restricted stock discounts observed in restricted stock transactions. The only difference between public company shareholders and restricted stock purchasers is the period of enforced illiquidity enforced by SEC Rule 144. When appraisers estimate marketability discounts based on averages of dated restricted stock studies, what is the implied holding period and what is the implied holding period premium? If you can’t address those questions, you will have difficulty in sustaining the credibility of your concluded restricted stock discounts.

In the first article in this series on restricted stock discounts, we examined the Silber Study, which was published in 1991. In this post, we focus on the differences and similarities between restricted shares and freely traded shares of issuers of restricted stock to hone in on the expected holding period premium. This series should begin to change how you think about restricted stock discounts.

This is the first of a series of posts that will examine the use (or misuse) of restricted stock discounts directly to attempt to develop marketability discounts for illiquid minority interests of private companies. The Silber Study, which was published in 1991 in the prestigious Financial Analysts Journal, should have given the business appraisal profession a clue that the use of averages of studies is not meaningful.

This post recounts 250 consecutive days of walking five or more miles per day. It also notes a few things I’ve learned from those 250 days and the 183 days of the COVID-19 pandemic we have all experienced since February 20th.

The public stock markets are highly concentrated in the top 500 companies both in terms of market capitalization and earnings. This post looks at those concentrations and at the declining number of public companies. We also discuss the S&P 500 Index and the Russell 2000 Index to see how the largest public companies have fared relative to small cap stocks since the markets recognized the COVID-19 Pandemic.

Was the selection of the first appraiser and obtaining his result a revocable offer on the part of the Company pursuant to the buy-sell portion of the operating agreement? Was it okay to withdraw the “offer” prior to the time that Plaintiffs had accepted it? This was the Company’s basic argument. Or was the selection of the first appraiser by the Company a binding acceptance of the implicit call option that the Plaintiffs had negotiated at the time the operating agreement was signed? This was the Plaintiffs’ argument. Read this post to see what Vice Chancellor McCormick of the Delaware Chancery Court concluded.

Often, when we take a step, either literally or figuratively, we don’t know where that step will lead. This post is about taking 10,000 steps one day, December 15, 2019, and how, somehow, I’ve been able to do that every day for 200 days as of today. I never thought about a long goal. It has simply developed from a series of short-term goals. Hope you enjoy the post!

The role of the third appraiser is always to bring resolution to buy-sell agreement valuation processes. The question is how the third appraiser’s conclusion will be used to bring pricing resolution. In this post we see that one “typical” way of considering the third appraiser’s conclusion has in interesting and potentially dangerous twist for valuation processes.

Recently, I was involved, for a moment, in a buy-sell agreement valuation process that had many issues. A key executive in a company was terminated. He owned about 15% of a profitable operating company, and his firing triggered the company’s buy-sell agreement provisions in its operating agreement. This was a buy-sell agreement that was virtually destined to fail unless the parties agreed to a change in the process.

Buy-sell agreements can go bad if all parties to them do not pay attention to their terms before signing them. This is particularly true in the New York case of Yakuel v Gluck, which was filed in early May in the Supreme Court of New York County.