What is the range of discount for a public minority investor?

The range of discount for a public minority investor can often be found in the context of estimating the "minority discount," which reflects the reduction in value that a minority shareholder faces when compared to owning a controlling interest in a company. Generally, minority interests lack the control privileges that majority shareholders enjoy, such as influencing corporate decisions or benefiting fully from distributions.

In practice, the minority discount for public companies usually ranges between 25% and 35%. This range is supported by empirical studies and transaction data, reflecting market behavior where minority interests in publicly traded companies often command less value due to their lack of control and voting power.

The higher percentage ranges, such as those presented in the choice for 35-55%, are typically associated with illiquid or private enterprises rather than public companies. Publicly traded entities typically have more readily available market data, leading to lower discounts due to the liquidity of shares and easier access to information.

Understanding these nuances is essential for accurate business valuation, particularly when determining the fair market value of minority interests.