Put Options as Purchases of Liquidity
In this article, I explore the logic behind using put options and similar techniques to estimate discounts for lack of marketability. While such efforts are instructive in understanding why some investors would require such discounts, I argue that these efforts cannot inform practitioners about either minimum or maximum discounts that are appropriate in any given context.
Contributor Notes
Dr. John Hatch received his Ph.D. in economics from the University of Minnesota. He is with the Ballentine Barbera Group in Washington, D.C., where he specializes in business valuations of privately held companies, the valuation of intellectual property, and transfer pricing issues for multinational companies. Dr. Hatch is a candidate member of the American Society of Appraisers.