Does one need to be concerned if a guideline comparable could be considered a thinly-traded stock?
• Yes. There might be some kind of liquidity discount implicit in the calculation of a benchmark TCOE and CSRP. Thus, you should be aware of this when assigning a lack of marketability to a minority interest in a privately-held firm. As an aside, but on a somewhat related matter, appraisers need to be cognizant of the fact that some of the pre-IPO transactions used for guidance to determine lack of marketability discounts may have been entered into by an under-diversified investor. Therefore, the difference between the pre-IPO price and the IPO price may incorporate more than just marketability, such as the difference in required rates of return between under-diversified and diversified investors (read: CSR may have mattered in the pre-IPO transaction and not mattered in the IPO transaction as investment bankers do not price CSR since the company is going public). This unquantifiable impact is probably more substantial as the period between transactions (Pre-IPO and IPO) increases sinc
