The discount for lack of control in transactions of unquoted minority interests. Empirical evidence from Italy

This paper aims to give contribution to the issue of minority discount valuation due to the lack of control in companies unquoted on regulated markets. First, the concept of minority discount for lack of control will be defined and the economic reasons that motivate its valuation will be analyzed. The paper examines both direct and indirect methodologies used to calculate minority discounts for lack of control and developed by the main international doctrine. Specifically, the paper focuses on indirect methodologies, which estimate the market value of minority shares by applying a discount percentage to the pro-rata value of the total economic capital of a company (W). In the light of the analysis, the paper will explore which valuation methodologies are commonly applied in the Italian professional practice.