LIMITED MARKETABILITY

Saturday Brain Storming Thought (271) 19/04/2025

LIMITED MARKETABILITY

Limited Marketability refers to the difficulty and cost associated with selling an asset, like a business or ownership interest, quickly and at a predictable time

It’s a key consideration in business valuation, particularly for privately held companies, as it suggests a lower value compared to publicly traded companies due to the added risks and costs of finding a buyer

Difficulty and Cost of Sale

Limited Marketability implies that finding a buyer for a business or ownership interest might be time-consuming and involve higher transaction costs compared to public markets

Potential for Lower Valuation

Because of the added risk and potential for Lower sale prices, private companies are often valued lower than their public counterparts to account for the lack of marketability

Discount for Lack of Marketability (DLOM)

This is a specific discount applied in business valuation to account for the limited marketability of privately held companies

Contrast with Liquidity

While liquidity focuses on the ease of selling an asset quickly, marketability also considers the price and costs associated with the sale

Businesses Valuation

Understanding marketability is crucial for accurately valuing businesses, especially when determining the fair market value of private companies

Investment Decisions

Investors need to consider marketability when evaluating potential investments in privately held businesses

Tax Planning

Tax authorities often consider marketability when determining the value of assets for estate planning and other tax purposes

Meaning of Limited Marketability

Limited Marketability means that you can’t sell it until this date

After that date , it will be fully marketable (ie you can sell it)

Definition of Marketability

1) The quality or state of being in good demand, saleability

2) The characteristics of being suitable for sale

3) The aspect of being related to buying or selling on market

Marketable Title

Marketable Title is understood to mean that the title to a parcel of land can be conveyed free from material encumbrances, claims, disputes about ownership or other restrictions that may limit a property owners use and enjoyment of the property

Benefits of Assessing Marketability

1) Improved decision making about a clear understanding of your target market

2) Increased sales

3) Improved profits

4) Greater customer satisfaction

5) Reduced risk associated with launching new products or services

Evaluating the Marketability of your Business Idea

1) Identify your target market

2) Research your competition

3) Assess the costs involved

4) Consider the potential return on investment (ROI)

Maximizing Marketability for Business Success

1) Customer Centric approach

2) Differentiation ie standing out in a crowded market

3) Value Proposition which clearly articulate the value of your product being

4) Pricing Strategy

5) Brand storytelling

6) Feedback loop

7) Influencer marketing

8) Agile adaptation

Leveraging Marketability Research for Business Success

1) Customer Centric approach

2) Competitive landscape assessment

3) Product positioning and messaging

4) Risk mitigation

5) Long-term Strategy

Future Trends in Marketability and Business Growth

1) Personalization at scale

2) Sustainable practices and ethical branding

3) Blockchain and Trust

4) Voice search Optimization

5) AR and VR Experience

6) Data privacy and compliance

7) Collaborative economy and Gig Work

8) Health and Wellness tech

9) Emotional AI and customer experience

10) Globalization and Localization

Role of Marketability in Business Success

1) Understanding Marketability

2) The Marketability ecosystem

3) Marketability in action

4) Challenges and Pitfalls

5) The future of Marketability

Limited Marketing

The concept behind limited drops marketing is based on the principle of scarcity

By releasing a limited quantity of a product or collection, you are able to create a sense of urgency among customers, who feel compelled to buy the product before it sells out

Types of Marketability

Marketability is the competitive position of an brand, product or service with respect to a market

Marketability is the potential for a product to sell and the risk that it won’t sell

1) Cost and Price

2) Customer needs

3) Functionality and Performance

4) Quality

5) Distribution

6) Reputation and Recognition