Business Valuation Key Person Discount
This key person may be a revenue generator possess technical.
Business valuation key person discount. A key person or thin management discount would be appropriate in the valuation of a closely held company to the extent that an owner or employee who would be difficult to replace is responsible for a significant or material portion of the business such as sales or profits. Instead of taking a separate discrete discount at the entity level some experts incorporate a key person discount into their valuation methodology. An amount or percentage deducted from the value of an ownership interest to reflect the reduction in value resulting from the actual or potential loss of a key person sibling roles affect business outcomes.
According to the international glossary of business valuation terms a key man discount is.