Archive 2011-42: Chris Mercer’s Opinions of the IRS DLOM Job Aid




Archive 2011-42: Chris Mercer’s Opinions of the IRS Critiques of the DLOM Studies, Databases and Models

presented by Chris Mercer, ASA, CFA, ABAR, with Travis W. Harms, CPA/ABV, CFA and Special Guest Brian Pearson, CPA/ABV/PFS, ASA

Webinar 42 Broadcast Date: September 15, 2011

Webinar Outline:

  • Mercer introduction of webinar

  • Special presentation from Brian Pearson on the Pre-IPO studies including his Valuation Advisors detailed Pre-IPO transactions database

  • Mercer and Harms review of the IRS’s DLOM Job Aid regarding the following DLOM models, databases and studies:
  • Overview of Factors that Contribute to DLOMs which will include an examination of the “Factors Influencing Marketability Identified” section in IRS
    DLOM Job Aid, identifying the factors that influence marketability discounts, and a discussion of how the factors impact value and, therefore,
    appropriate marketability discounts
  • Market Approach Methods including the applicable Business Valuation Standards (USPAP, ASA Business Valuation Standards and SSVS-1), review of the
    benchmark studies (restricted stock studies and pre-IPO studies.
  • Database studies including FMV Opinions restricted stock database and methodology including the restricted stock equivalent analysis, Valuation
    Advisors detailed Pre-IPO database, and Long-term equity anticipation securities (“LEAPS”)
  • Academic/Other studies including Bajaj, Denis, Ferris and Sarin private placement study, Wruck 1989 article (study of 128 private placements by 65
    companies from 1979 to 1985) and the Hertzel/Smith 1993 article (study of 106 private placements from 1980 to 1987)
  • Income Approach Methods including Applicable Business Valuation Standards, Option Pricing Models, and Quantitative Models. For the Quantitative
    models there will be a conceptual overview of the models, information on the Quantitative Marketability Discount Model (“QMDM”), and a review of other
    quantitative models
  • Comments on the IRS DLOM Job Aid
  • Implications for appraisers and clients
  • Implications for the IRS
  • Roadmap for cross-examination or productive review that will help advance the discussion and debate?

Learning Objectives:

· The participant will learn what the factors influencing marketability are, as outlined by the IRS, and how the various models, methods and databases
enable appraisers to consider their impact on value and, therefore, discounts for lack of marketability

· The participant will learn how the speakers evaluate the IRS’s view on the applicability and reli­ability of most of the major DLOM methods, models
and data including background, summary, areas of focus, strengths, weaknesses, important parameters, prevalence in professional practice and court case
coverage and citations

· The participant will learn what Mercer and Harms think will be the impact of the IRS DLOM Job Aid on the valuation profession

· The participant will learn Brian Pearson’s opinions about the IRS’s critique of his Valuation Advisors Pre-IPO studies and detailed Pre-IPO
transaction database

Included in this downloadable archived webinar package:

  • Audio/Video file
  • Webinar transcript
  • Original Webinar handouts

The archived webinar package is an Adobe Presenter PDF file that allows you to view the video of the webinar with the synced audio so that you see the presentation just as it was presented “live.” The Presenter format also allows for easy navigation through the webinar so you can quickly go to a specific section in the presentation. The handout materials are included in the file. To view the Webinar Presenter file, you must have Adobe Reader software version 9 or higher. You can download the free current version of Adobe Reader at Please note that CPE is only available for live webinar broadcasts.

Additional information

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