| Course | ACC 345 Financial Statement Analysis/Business Valuation |
|---|---|
| Module | Module 8 |
| Paper type | undergraduate discussion post on valuation discounts and standards of value |
| Length | About 400 words, 3 pages |
| Format | APA 7 student paper |
| School | Southern New Hampshire University |
| Program | BS Accounting |
| Updated | October 2026 |
Free sample paper for ACC 345 Module 8
Module Eight Discussion
Ten Percent of the Shares, Seven Percent of the Value
Before any sale to the private equity buyer, the owner of the Atlanta sprinkler contractor wants to give her son, who runs the service division, 10 percent of the company's shares. The valuation report put equity value at about $17.7 million. Her accountant says the gift should be reported at about $1.2 million, not $1.77 million. The difference is not a loophole; it follows from what the son actually receives.
The $17.7 million figure values 100 percent of the company, with full control and on a basis comparable to a business that could be sold. A 10 percent holder has neither. He cannot set salaries, decide distributions, choose auditors or force a sale; his mother controls all of that. A buyer of his shares would pay less for that powerlessness, which is the discount for lack of control. Using the gap between control and minority prices observed in acquisitions, the appraiser applied 15 percent, bringing the value to about $1.5 million.
The shares also cannot be sold quickly. There is no market, the shareholder agreement restricts transfers and the family is unlikely to welcome an outside buyer. That is the discount for lack of marketability. The best-known evidence comes from restricted stock, shares of public companies that cannot be sold for a period: Silber (1991) found that such shares sold at an average discount of about a third to their freely traded counterparts, with larger discounts for smaller firms. The appraiser applied 20 percent, bringing the gift to about $1.2 million, roughly 7 percent of total equity.
The discounts are applied in sequence, not added: 0.85 times 0.80 is 0.68, a combined 32 percent. Damodaran (2012) argues that illiquidity discounts should reflect the specific holder's likely holding period and the company's cash distributions, so a son who expects to receive distributions and sell in the coming buyout might warrant a smaller discount. Koller et al. (2020) note that control premiums in acquisitions often reflect expected improvements rather than control alone, which cautions against large minority discounts. The IRS reviews these figures closely, and an appraisal that cannot explain its discounts invites a challenge.
For classmates: if the company is likely to be sold within a year for cash, should the son's gift still carry a 20 percent marketability discount, or does a known exit change the answer?
References
Damodaran, A. (2012). Investment valuation: Tools and techniques for determining the value of any asset (3rd ed.). Wiley.
Koller, T., Goedhart, M., & Wessels, D. (2020). Valuation: Measuring and managing the value of companies (7th ed.). Wiley.
Silber, W. L. (1991). Discounts on restricted stock: The impact of illiquidity on stock prices. Financial Analysts Journal, 47(4), 60-64. https://doi.org/10.2469/faj.v47.n4.60
What the ACC 345 Module 8 instructions ask for
The final ACC 345 discussion usually asks about the context of a valuation: the standard of value, the interest being valued and the discounts or premiums that apply. Expect a post of several paragraphs with sources and replies. Strong posts take a specific case, such as a minority gift, a buyout of a partner or a divorce, and explain how the purpose and the size of the interest change the value, applying discounts for lack of control and lack of marketability with their basis. Many prompts also ask about the evidence behind discounts or the scrutiny they receive from courts and the IRS. A closing question that asks classmates to judge the fairness of the discounts produces useful debate.
How this ACC 345 Module 8 discussion example is built
The post starts from the contractor's equity value of about $17.7 million on a controlling, marketable basis and asks what 10 percent is worth as a gift to the owner's son. A minority holder cannot set salaries, distributions or a sale, so a discount for lack of control of about 15 percent applies. The shares cannot be sold freely, so a discount for lack of marketability of about 20 percent follows, supported by Silber's evidence that restricted public stock sells at a sizable discount. Combined, the gift is worth about $1.2 million, roughly 7 percent of total equity. The post notes the IRS's scrutiny of such discounts and asks classmates whether they are fair.
Where the ACC 345 Module 8 rubric puts the points
Graders of the ACC 345 closing discussion typically look for a clear explanation of the standard of value and the interest being valued, correct application of discounts or premiums, support from evidence, and engagement with classmates. Top posts apply discounts multiplicatively in the right order, explain what each discount compensates for, and acknowledge that the size of discounts is judgment supported by data rather than a fixed rule. Posts that add discounts together, apply a minority discount to a controlling interest or cite discount percentages without any basis score lower. Replies that test a classmate's discount with a counterexample show the deeper understanding graders reward.
ACC 345 Module 8 help: the mistakes that cost points
Posts on discounts most often go wrong by adding percentages instead of applying them in sequence, by applying a marketability discount to a public company's freely traded shares, and by ignoring how the purpose of the valuation changes the answer. Another common gap is treating discounts as tax tricks without explaining the economics behind them. If your prompt involves a partner buyout, a shareholder dispute or a divorce, the standard of value may be different, such as fair value under state law, and the same reasoning can be rebuilt around that standard. Show the arithmetic step by step so classmates can test each discount separately.
Get ACC 345 Module 8 written to your instructions
Send the ACC 345 Module 8 prompt and the interest or purpose it describes. The post will explain the standard of value, apply any discounts or premiums with their basis and connect them to evidence, then ask classmates a question. Turnaround runs about two days, and you pay nothing for the first. The paper above is an original model document written by our desk, not a submitted student paper and not an official Southern New Hampshire University document.
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ACC 345 Module 8 questions, answered
Where can I find a free ACC 345 Module 8 Discussion sample?
This page includes the full ACC 345 Module 8 post explaining why a 10 percent gift of a private company is worth less than 10 percent of its value.
What is a discount for lack of control?
A reduction in value for a minority interest that cannot direct the company's decisions, such as distributions, compensation or a sale.
What is a discount for lack of marketability?
A reduction in value because an ownership interest cannot be sold quickly and cheaply, reflecting the cost and risk of illiquidity.
Are valuation discounts added or multiplied?
They are applied in sequence, each to the value remaining after the previous one, so a 15 percent and a 20 percent discount combine to 32 percent, not 35.
Does the IRS accept valuation discounts on gifts?
It accepts reasonable, well-supported discounts but often challenges large ones, especially for entities holding mainly passive assets.