Discount for Lack of Marketability

Discount for Lack of Marketability refers to the reduction in value applied to an asset because it cannot easily be sold or converted to cash. This occurs when an investment, such as shares in a private company, lacks a ready market like publicly traded stocks. Buyers may expect a lower price due to the difficulty in selling the asset quickly or at full value. Essentially, it represents the risk and illiquidity associated with holding an investment that doesn’t have immediate buyers or a clear market price.