What factors are generally considered when determining DLOM?

When determining the Discount for Lack of Marketability (DLOM), the strength of management and the reliability of financial statements are indeed key factors to consider. Management strength can impact the perceived value of a business, as strong leadership often instills confidence in potential investors. The capability of management affects operational performance and future profitability forecasts, which can impact marketability.

Financial statement reliability is equally important because investors and analysts require accurate, consistent, and verifiable financial information to make informed decisions. If financial statements are poorly prepared or unreliable, it raises concerns about the company's actual performance and potential risks, further decreasing marketability.

In contrast to this, other factors might not be as directly influential on DLOM. While market potential and state regulations may play a role in the overall valuation of a business, they are not primary considerations when specifically assessing the lack of marketability of a business ownership interest. Furthermore, historical performance, while relevant for assessing past profitability and trends, does not fully capture the present management effectiveness or financial transparency, which are crucial for investors assessing marketability.