Appraisal Economics Inc. has conducted a valuation of an interest in a holding company that owns limited partnership interests in hedge funds, managed futures funds, and private equity funds, and direct investments in two private companies. Our engagement consisted of valuing each hedge fund interest, managed futures fund interest, private equity fund interest, and valuing the investments in the private companies. Then we valued the interest in the holding company for tax purposes. Interests in alternative investments and holding companies are generally non-controlling and illiquid, and may require the application of discounts for lack of control and discounts for lack of marketability to determine the fair market value. Selecting credible discounts requires understanding the economic structure, legal rights and restrictions, and nature of the markets for these types of privately held investments.
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