DLOM & DLOC Minority & Illiquidity Discount Calculator
What is the fair market value of an unlisted minority equity holding after applying Discount for Lack of Control (DLOC) and Lack of Marketability (DLOM)?
Financial Inputs
Discount reflecting the minority shareholder lack of voting control over dividends, board seats, and strategy (typically 15-25%).
Discount reflecting the difficulty and delay in selling unlisted private shares versus publicly traded stock (typically 20-35%).
Non-Marketable Minority Fair Market Value
For an unlisted minority stake with a pro-rata controlling benchmark of ₹5,00,00,000, applying a 20% DLOC and 25% DLOM yields a net Fair Market Value of ₹3,00,00,000.
Combined Total Multiplicative Discount
40%
Total Valuation Discount in Rupees
2,00,00,000
Key Financial Takeaways
- For an unlisted minority stake with a pro-rata controlling benchmark of ₹5,00,00,000, applying a 20% DLOC and 25% DLOM yields a net Fair Market Value of ₹3,00,00,000.
- Combined total multiplicative discount is 40% (reducing headline value by ₹2,00,00,000).
- DLOC reduces value by ₹1,00,00,000, and unlisted marketability illiquidity deducts an additional ₹1,00,00,000.
Frequently Asked Questions
Why are DLOC and DLOM multiplied together instead of added?
Adding discounts together (e.g. 20% + 25% = 45%) is an appraisal error because DLOM must be applied to an already-discounted minority value, not to the controlling value. Multiplicative compounding (1 - 0.80 × 0.75 = 40%) provides the methodologically sound fair market value accepted by Indian tax tribunals.
Calculators on this platform provide indicative mathematical estimations based on industry-standard financial appraisal models (including Tandon Committee Method II, Nayak Turnover Method, and standard compound amortisation).
They do not constitute a formal facility sanction, credit commitment, or legal advisory from SME PAISA or any partner banking/NBFC institution. Final terms, interest margins, security stipulations, and credit sanctions remain strictly subject to formal credit appraisal, audited balance sheet verification, CMA Data assessment, and risk committee approval by institutional lenders.
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