How do i calculate an illiquidity discount for a private company
I am assuming you mean illiquidity by the fact that owners cannot cash out or sell the business anytime they want. This is a hard one and finance research is still trying to figure it out. I am not sure how you would calculate the discount because you have to compare it to some other benchmark in order to see whether if it is discounted or not.
There are a couple of methods. I recommend you read "Business Valuation Discounts & Premiums" by Shannon Pratt for a good idea on the studies and approaches that are used.
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