In THE REAL ESTATE CLIENT: VALUATION SERVES IMPORTANT MASTERS IN LITIGATION CASES, forensic accounting expert witness Richard M. Squar writes on fair market value:
Having determined the aggregate net asset value of the limited partnership interest, various factors need to be considered in arriving at fair market value of the interest. These factors include the cash flow characteristics inside the partnership, the anticipation of future cash flow and ability to make distributions to partners, the economic circumstances regarding the assets and mortgages on the properties, the terms of the partnership agreement, and consideration of any special items that may effect the potential for profit or risk of loss.
There are two discounts applied to the aggregate net asset value in a business valuation in an attempt to quantify the above considerations: The minority interest discount (or discount for lack of control) and the marketability discount. Both lack of control and lack of marketability are inherent in limited partnership interests.