Gift, Estate, & Income Tax Compliance
2021 01 Value Matters

April 1, 2020

Mercer Capital’s Value Matters® 2020-04

The 1991 Silber Study of Restricted Stock Discounts

We Should Have Known Then

Excerpted from www.ChrisMercer.net Blog

By the time I came into the business valuation profession, appraisers recited a small number of restricted stock studies to conclude that typical discounts were in the range of 25% to 45%, and therefore, that marketability discounts for illiquid minority interests of private companies should be in that range, as well.

But Professor William L. Silber wrote an article in the respected Financial Analysts Journal that told a different story.1  However, business appraisers ignored wisdom found in the Silber Study and only took its conclusion that the average discount in the study was 34% as confirming of the existing lore.

Summary statistics from the Silber Study are provided in Exhibit 8.4 of our forthcoming book, Business Valuation: An Integrated Theory, Third Edition (Mercer & Harms, Wiley 2020), which is available for purchase on Amazon.com. Exhibit 8.4 is reproduced on page 3 of this newsletter.

But wait, there’s more.  Professor Silber looked at his sample of 69 restricted stock discounts and noticed a distinct difference between the companies that had lower discounts (less than 35%) and higher discounts (greater than 35%).  The study provided additional color as found in Exhibit 8.5 (on page 3 of this newsletter).

What a difference a more informed look makes.  The average for transactions with discounts exceeding 35% was 54%, while the average for transactions with discounts less than 35% was 14%.  What could have caused this difference?  Professor Silber provided summary statistics for the two subgroups.  Simply put, the companies with lower discounts were just more attractive in terms of cash flow, perceived risk, and likely expected growth than the companies with higher discounts.  They were larger in terms of revenue and market capitalization and more profitable than the companies in the larger discount sample.

A picture is helpful.  I wrote about the Silber Study in Quantifying Marketability Discounts (which introduced the QMDM) in 1997 and provided a chart similar to Exhibit 8.6 from the new book (on page 3 of this newsletter).

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April 2026 | Valuation Date Discipline
Value Matters® April 2026

Valuation Date Discipline

In estate and gift tax related business valuation, few inputs are as consequential, and as frequently underestimated, as the valuation date. While the concept appears straightforward, the practical implications are anything but. The valuation date determines the universe of information available to the appraiser, frames the applicable standard of value, and anchors the conclusion in a specific economic, industry, and subject company context.
Mercer Capital to Sponsor The 32nd Annual Advanced Estate Planning Strategies Course
Mercer Capital to Sponsor The 32nd Annual Advanced Estate Planning Strategies Course
Mercer Capital is proud to sponsor the 32nd Annual Advanced Estate Planning Strategies course, a live, in-person CLE event held April 23-24, 2026, at the St. Julien Hotel & Spa in Boulder, Colorado. Representing the firm at the event are J. David Smith, CFA, ASA, and Barbara Walters Price.Presented by TexasBarCLE and cosponsored by the Real Estate, Probate & Trust Law Section of the State Bar of Texas, the course brings together attorneys and advisors for two days of in-depth discussion on advanced estate planning topics. The program features sessions addressing retirement benefits planning under SECURE 2.0, life insurance strategies, multijurisdictional planning considerations, and approaches to minimizing conflict in estate and trust administration.Attorneys attending the course will be focused on navigating increasingly technical planning issues, from evolving transfer tax rules to the practical challenges of administering complex estates. Mercer Capital regularly supports these efforts through valuation analyses used in estate and gift tax planning, charitable giving, and ownership transitions, helping clients and their advisors make informed decisions in high-stakes situations.J. David Smith is a Senior Vice President at Mercer Capital with more than 25 years of experience in business valuation. He provides valuation services for tax planning, transactional purposes, and financial reporting with particular experience in industries including financial services, oil and gas, and biotechnology.Barbara Walters Price serves as Chief Marketing Officer of Mercer Capital and is a member of the firm’s Board of Directors. She leads the firm’s marketing strategy and oversees corporate communications, business development, digital strategy, and thought leadership initiatives.Mercer Capital looks forward to connecting with attendees and contributing to the discussions at this year’s event. To learn more about this in-person CLE course, visit TexasBarCLE’s website: https://www.TexasBarCLE.com/new/?TransferTo=L23823.
Mercer Capital to Sponsor and Attend the 13th Annual Florida Tax Institute
Mercer Capital to Sponsor and Attend the 13th Annual Florida Tax Institute
Mercer Capital is pleased to sponsor the 13th Annual Florida Tax Institute, which will be held April 8–10 at The Ritz-Carlton Orlando, Grande Lakes in Orlando, Florida. Tim Bronza, CPA, ASA; Tom Insalaco, CFA, ASA; and Barbara Price will attend on behalf of the firm.More than a conference, the Florida Tax Institute is widely recognized as a leading educational forum for attorneys, accountants, trust officers, estate planners, and financial advisors. This year’s program features nationally respected speakers addressing timely developments in federal and state taxation, estate and gift tax planning, business tax matters, and emerging regulatory considerations. Sessions are designed to offer practical insights that professionals can apply directly in their client work.Tim Bronza serves as Managing Director of Mercer Capital’s Florida office. He has extensive experience valuing business interests for federal gift, estate, and income tax purposes and leads sophisticated valuation engagements across corporate and fiduciary contexts.Tom Insalaco is a Senior Vice President in Mercer Capital’s Florida office. Since 2008, Tom has performed valuation analyses across a broad range of industries, assisting attorneys, fiduciaries, and financial professionals with estate planning, exit planning, and transaction-related matters.Barbara Walters Price serves as Chief Marketing Officer of Mercer Capital and is also a member of the firm’s Board of Directors. She leads the firm’s marketing strategy and oversees corporate communications, business development, digital strategy, and thought leadership initiatives.Mercer Capital’s sponsorship reflects the firm’s ongoing commitment to supporting the tax and estate planning communities in Florida and beyond. Learn more about the event at https://www.floridataxinstitute.org/

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