The basis of such a valuation lies in having a solid grasp of the value of the company and / or its stock. This information may be used to settle a dispute, sell a business, assure investors or gain access to new financing sources. Whatever the goal, understanding the value of equity shares is key.
In some instances it is important to value minority equity which can have a lesser value because a minority owner has much less authority or control over decision making in the organization. It is generally assumed that a minority owner is not in the position to influence strategic planning, the election of board members or other significant decisions. Because of the limits placed on a minority owner, a discount is applied to the value of the stock.
