IBA, ASA, NACVA 22nd Annual BV Conference Minneapolis, MN February 2, 2012 This presentation focused on the Discount for Lack of Marketability

1. Discounts for Lack of
Marketability ©
By Michael Gregory
Michael Gregory Consulting LLC

2. Michael Gregory
• 28 years at IRS as engineer
valuer, manager, operations team
lead, controller, acting assistant
director, territory manager
• Championed IRS DLOM Job Aide 2009
• Opened Michael Gregory Consulting LLC
September 2011
• mg@mikegreg.com 651-633-5311
• ASA, CVA, MBA, Qualified Neutral©
February 1, 2012 Michael Gregory Consulting LLC © 2

3. Disclaimer
The opinions presented here are those of Michael
Gregory. Michael Gregory does not represent the
IRS. Any opinions presented in this seminar are
those of the author and do not represent an
official position of their current or previous
employers. This material is offered for
educational purposes only. The author and his
employer expressly disclaim any
liability, including incidental or consequential
damages, arising from the use of this material or
any errors or omissions that may be contained in
it.
February 1, 2012 Michael Gregory Consulting LLC © 3

4. Discounts
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5. Background and Today’s Presentation
• IRS Job Aide on Discount for Lack of
Marketability at irs.gov Originally Prepared
9/2009 for IRS Valuers
• August 2011 Developments
• The Job Aide Public and Private
• Comments on the Job Aide
• Comments Since Entering Private Practice
Regarding DLOM’s
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6. August 2011 Develops
• Retirement July 31, 2011
• Call from Eva Lang and Jim Hitchner
• Call from the IRS
• Research
• IRS Officially Publishes Job Aide August 22nd at
4:01 PM
• Webinar August 23rd with Jim Hitchner and
Jim Alerding
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7. Follow Up After Webinar
• Webinar Published
• Other Follow Up Webinars
– Lance Hall September 8, 2011 FMV Opinions
Rebuts Job Aide
– Chris Mercer September 15, 2011 QMDM
• ASA BV Conference in Chicago October 10-12,
2011– DLOM Commentary
– Espen Robak, John Finnerty, Ashok Abbott
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8. Job Aide on DLOM at irs.gov
• Download It
• Read It
• Key Points
– When
– What
– Why
• How It May Be Useful
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9. IRS Job Aide Key Points
• Length 111 to 116 Pages Depending on Source
• Prepared and Reviewed by 5 ASA’s, 8 AVA/CVA’s
and 3 CPA’s
• IRS View on DLOM’s as of 2009
• Identifies 33 Factors Deemed Important *
• Includes 17 Initial IDR Items *
• Includes How IRS Valuers Should Approach Issue
As a Reviewer
* Suggest Include In Your Report
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10. IRS Job Aide Key Points Continued
• Includes How IRS Valuers Should Approach Issue
As a Valuer
• Provides Sample Report Language *
• Detailed Strengths and Weaknesses of Most
Common Approaches *
• Addresses Concerns with Fair Market Value
Opinions Statistical Analysis
• Provides Detailed Commentary on Other
Methods
* Suggest Include In Your Report
February 1, 2012 Michael Gregory Consulting LLC © 10

11. Some Feedback From Three Webinars
• 900 Participants
• Key Points From the Webinars
– What Do You Rely Upon for DLOM?
– How Long Do You Spend on DLOM?
– How Useful and Will the Job Aide Change How You
Approach DLOM’s?
– Will DLOM Change Approach and Will It Make You
Spend More Time DLOM’s in the Future?
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12. Job Aide Comments
• Executive Summary
– Background
– Objective
– Approach
– Conclusion
• Introduction
• Organization
• Other Authors’ Observations
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13. Life In New Venture
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14. Observations Since Joining the
Public Sector
• Sources: BV Wire, NACVA Ambassador Quick
Read and Valuation Examiner, ASA BV
Conference in Chicago, Networking with
Valuers and Their Clients
• John Finnerty Asian Option Model Big 4
• Pluris Espen Robak Secondary Markets
• Valuation Advisors Largest Data Base and Int’l
• Ashok Abbott Liquidity Analysis from Public
Markets
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15. Observations Since Joining the
Public Sector Continued
• John Paglia Pepperdine Private Capital
Markets
– Revenue Successful Loans
– $1 - $5 Mil 44%
– $5 - $25 Mil 72%
– >$25 Mil 90%
• Question – Where Does Your Client Obtain
Funds and Where Is FMV Source for Funds?
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16. Observations
• IRS Job Aide on DLOM’s Worth Reading
• Look at Why It Was Written and Audience
• Nothing Personal – Strictly Analytic
• Multiple Approaches Recommended – Use
Judgment and Document Rationale
• Courts More Analytically Oriented
• See Pro’s and Con’s of Methods and Choose
Accordingly
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17. Questions
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