Minority discount

Also called: minority interest discount

In one line

A reduction in per-share value because a small, non-controlling stake carries no power to influence the company.

In plain English

Owning a tiny slice with no board seat or control is worth less per share than a controlling block, so buyers of a minority stake typically pay a discount.

If you were explaining it to a 5-year-old

Owning 1 toy out of 1,000 gives you no say in the club, so each of your toys is worth a little less than if you owned half.

Why it matters when you sell

As an employee you almost always hold a minority stake, so this discount is one more reason your sale price trails the headline value.

Put it to use

What's a fair discount?

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Sources

A general market-practice term. See how we define and source the glossary in our methodology. General information, not advice.

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Minority discount

Related terms

Put it to use