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Domestic equities 9.6%
Foreign equities 13.8%
3. Determination of the Minority Interest Discount
The minority interest discount factors determined above
yield a weighted average discount of 6.02 percent, determined as
follows:
Percent Percent
Percent Disc. Weighted
Asset Type of NAV Factor Average
Cash & money market funds 44.0 2.0 0.88
U.S. Government bond funds 0.4 6.9 0.03
State and local bonds (MI) 2.1 3.5 0.07
Natl. Muni bond funds 5.0 3.4 0.17
Domestic equities 43.6 9.6 4.19
Foreign equities 4.9 13.8 0.68
Discount 6.02
Rounding to the nearest percentage point, we conclude that the
appropriate minority interest discount for the transferred
interests is 6 percent.
C. Marketability Discount
1. Introduction
The parties agree that, to reflect the lack of a ready
market for the transferred interests, an additional discount
should be applied to the partnership’s NAV (after applying the
minority interest discount) for purposes of determining the fair
market value of those interests. Such a discount is commonly
referred to as a “marketability discount”. The parties disagree
on the appropriate magnitude of that discount in the context of
the transferred interests.
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