Restricted Securities

Securities of closely held companies are not freely tradable since they lack liquidity compared to the stocks of publicly traded companies. Therefore, the price of public stocks may over-inflate a reasonable estimate of value for restricted stocks. A valuation adjustment, known as a discount for lack of marketability or liquididty, is often made when valuing restricted securities in order to reflect this lack of liquidity or marketability. Discounts can vary greatly depending on the specific economic circumstances pertaining to the security. IRS guidelines, as well as almost every tax court decision regarding valuation of restricted securities, permit a discount for lack of marketability or liquidity.

MHP can provide expert valuation opinions for restricted securities by reviewing and analysing of a variety of operational, financial and economic factors.  We frequently apply our adept restricted security knowledge for gifting, financial reporting, and matrimonial actions.  MHP can help ensure that clients are able to accurately report the value of their restricted securities, in any type of financial or tax reporting environment.