Illiquidity discount

The reduction in value for a stake that cannot readily be sold. A holding worth ₹1,000 crore if freely traded might be valued at ₹750 crore if it takes a year to exit.

Estimates come from restricted-stock studies and from comparing pre-listing private rounds to the eventual listing price, and they scatter widely, typically between 15% and 35%.

The discount should scale with how long an exit realistically takes and with how uncertain the value is meanwhile. A stake in a stable, profitable private company with several natural buyers deserves less than a stake in a loss-making one with none.

The number is a judgement wearing a percentage sign. Justify it in words.