WHAT CARE MUST BE TAKEN WHEN USING THE FMV RESTRICTED STOCK STUDY TO DETERMINE DISCOUNTS FOR ASSET HOLDING COMPANIES?
Asset holding companies are inherently less comparable to companies in the FMV Restricted Stock Study than are operating companies, thus there will necessarily be more subjectivity and judgment involved. That being said, the restricted stock data does still provide very useful information regarding marketability discounts. For real estate holding companies, most appraisers use the Real Estate Holding Limited Partnership (RELP) transaction data as a benchmark, which provides indications of the discount from net asset value (i.e., total discount for lack of control and marketability). In addition to the RELP data, you must consider the additional illiquidity of privately held entities versus publicly registered partnerships such as the RELPs. At FMV Opinions, Inc., we like to make comparisons with small and large blocks of restricted stock in the FMV Restricted Stock Study, since large blocks are more illiquid due to Rule 144 dribble-out requirements. This provides support for an increme
