WHY DOES FMV OPINIONS RECOMMEND USING THE TRANSACTION MONTH DISCOUNT (MONTH-OF)?
While there are arguments for month-prior, month-of and month-after, no single argument has been compelling to FMV Opinions. FMV Opinions uses the month-of because it is the time frame closest to the actual restricted stock transaction. Moreover, because, for most transactions, the exact date is unknown (only the month is indicated), by using the month-of, you are probably equally weighing pre- and post-transaction pricing. In other words, it balances itself out. FMV Opinions has read academic studies where the announcement of a restricted stock private placement increases the price of the issuing company by up to 8% on average. This is confirmed (but at a smaller increase) between our month-of and month-after pricing. Having said all this, FMV Opinions think there is a stronger argument to use the month-prior pricing than the month-after. But, for the time being, FMV Opinions still leans toward the month-of.
