Calculator · Discounts
Control premium calculator
Answer four plain questions (the stake, how the company performs against its industry, who could change things, an optional check against deals) and get the value of control, the control premium and the discount for lack of control (DLOC) with a range, built the Damodaran way. Switch to the advanced view for typed DCF values, manual probabilities and every assumption.
How the control premium is measured
Following Damodaran, the value of control is the difference between the value of the business run optimally and its value under current policies (status quo). A minority holder can expect that gain only with the probability that someone else brings the changes about; a controlling holder can make them, subject to the rights it actually holds. The control premium is the ratio of the two equity values less one, and the DLOC is one minus its inverse, so a 25% premium is a 20% discount, not 25%.
Observed acquisition premiums are a cross-check only: they include buyer-specific synergies and, at times, overpayment, so they overstate the premium for control alone (Appraisal Foundation, VFR Valuation Advisory 3). Under IVS a premium or discount reflects a characteristic of the interest that the cash flows, the discount rate and the comparable evidence do not already capture; the concluded DLOC is applied in the Equity bridge before any DLOM.
Related: Equity bridge calculator · DLOM calculator · Bases of value · Model notes
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