What’s the Difference Between a Control Premium and a Minority Discount?

Both the Control Premium and the Minority Discount are really internal calculations used by the appraiser to match the control characteristics of the subject property (i.e., whether or not it comprises a controlling interest) to the source of information from which the value is determined. For example, if the appraiser is valuing a minority interest in a small business and relies on sales of controlling interests of such businesses - the kind of comparable sales information gotten from business brokers - he will have to adjust for the difference in control power between the subject (that has no control) and the buyers of the comparable companies (who enjoyed complete control). In this case, he would apply a minority discount or discount for lack of control. Conversely, if he derived his value estimate from non-controlling transactions - such as those observed in the stock market - and he were appraising a controlling interest, he might apply a control premium in respect of this difference.