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Quantitative Marketability Discounts Model
(QMDM)
QMDM allows the appraiser to very closely model a specific situation to accurately determine an appropriate marketability discount.
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What will QMDM do for you?
You may have to either review a valuation report using QMDM or even come up against it in court. Since there are many appraisers in the valuation community that use this methodology, you need to be familiar with its theory and application, even if you decide you are not going to use it for your appraisals. QMDM is a useful tool for calculating marketability discounts for closely-held companies. |
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Overview
Marketability discounts often represent the largest adjustment made to the value of a business. This Excel based financial model assists appraisers in developing, quantifying and defending marketability discounts.
There are numerous approaches and studies that are currently
used to determine appropriate marketability discounts. However,
little exists in theory or practice to assist appraisers in
applying the existing research to the specific circumstances
of business appraisal scenario. Consequently, most appraisers
use "average" premiums or discounts, tempered with
modest, or no adjustments predicated on the specific facts
of a case. QMDM addresses these situations by allowing the
appraiser to very closely model specific scenarios to accurately
determine an appropriate marketability discount.
- With QMDM, you'll be able to calculate marketability
discounts based on a specific factual situations rather
than just averaging results from various marketability
studies.
- You'll gain a solid understanding of the theoretical
precepts for developing sound marketability discounts,
as well as specific instructions on using the QMDM model
included in the on-line user's manual.
- The resultant discounts produced by QMDM can be incorporated
into these ValuSource valuation programs: ValuSource Pro
and Express Business Valuation
- You'll probably encounter QMDM in the courtroom or while
reviewing valuation reports. Since so many practitioners
in the valuation community use this methodology, shouldn't
you, at the very least, be familiar with its theory and
application? This is particularly true for those who choose
not to use it in their appraisal methodology.
- This software is based on Z. Christopher Mercer's book,
"Quantitative Marketability Discounts". The
software is the perfect way to put the book's comprehensive
discussion on this issue into real-world practice.
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