A discount for lack of marketability, DLOM, is a reduction applied to a private company's value because its shares cannot be converted to cash on a public exchange within days, the way a widely-traded stock can, and a buyer for them may take months to find.
DLOM shows up wherever a valuator has to attach a dollar figure to shares that have no listed market. It is not a tax concept in its own right, but the fair market value it reduces is: the $625,000 lifetime capital gains deduction in ITA s. 110.6 and the intergenerational transfer relief in ITA s. 84.1 both turn on an opinion of what the subject shares are actually worth, and a valuator's DLOM is one input into reaching that opinion — the statute itself specifies no discount and no percentage.
No Canadian regulator or professional body publishes a standard DLOM percentage, and nothing fetchable for this hub does either. What a Chartered Business Valuator weighs instead is case-specific: transfer restrictions and rights of first refusal in the shareholder agreement, the company's dividend history, how many realistic buyers exist for a block this size, and how long a sale process would realistically take.
The same restraint applies commercially. Deavo's guidance to Canadian small-business buyers and sellers is built entirely around ranges and disclaimers rather than fixed figures — its sector multiples are published as "illustrative medians for research context only", never as a single defensible number — which is the same posture a DLOM opinion has to take.
An individual holds shares in a CCPC through a family trust. The corporation's unanimous shareholder agreement gives the other shareholders a right of first refusal and bars any sale to an outside party without their consent, and no dividend has been paid in six years. A valuator engaged to support an ITA s. 110.6 capital gains deduction claim on a later disposition applies an unquantified, case-specific DLOM to the pro-rata net asset value to reach the fair market value reported — the size of that discount is a matter of professional judgment on this file's facts, not a published rate this glossary, or any Canadian source, can hand a reader.
See also: Minority discount · Control premium · Chartered Business Valuator (CBV).
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Canadian small-business transaction data is not published anywhere, so most valuations in this country quote an American benchmark. The Deavo–Treadstone Acquisition Index is a daily record of Canadian listings built to replace that: asking-price distributions by province and city are published now, and days on market, departure rates and asking-to-sale spreads follow as the series lengthens. Leave an email and we will tell you as each measure lands.
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