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A company is incorporated as per the corporate laws of the land. When incorporated, it becomes a separate legal entity by itself and continues to function as a separate legal entity unless it is intentionally shut down in accordance with the corporate laws of the land. Since the company is a separate entity and lives on until it is shut down, it theoretically has an infinite lifespan. The owners and managers of the company may come and go but the company theoretically can live forever. How many years do we need to forecast financials?

We address these questions here; “What is the Lifetime of a Business? How many years do we need to forecast financials?

Illiquid assets are often sold at a discount compared to comparable liquid assets when estimating value using multiples of revenues or cash flows or earnings. Studies show a 35% discount for illiquid assets (Maher 1976). How can you compute the liquidity discount- the penalty for not being a liquid asset?

On this page, we address the question: “How is the liquidity discount arrived at?”

Illiquid assets are often sold at a discount compared to comparable liquid assets when estimating value using multiples of revenues or cash flows or earnings. Studies show a 35% discount for illiquid assets (Maher 1976). Is that liquidity discount always appropriate?

We discuss the question: “When is a liquidity discount appropriate?”