MACROSLM · VALUATION ADVISORYDISCOUNT FOR LACK OF MARKETABILITY (DLOM)

Larkfield Instruments, Inc.
Private company · 409A / fair value
Valuation date · 30 Jun 2026

MARKETABILITY DISCOUNT ANALYSIS

DLOM analysis — non-marketable minority interestThree option-pricing proxies, a derived volatility input, and a restricted-stock cross-check

Concluded DLOM

16.2%

mean of option models

Non-marketable value

$41.9M

from $50.0M marketable

EXHIBIT 1

DLOM by method (%)

Method	Formula	DLOM
Chaffee — protective put	e^(−rT)·N(−d₂) − N(−d₁)	20.0%
Finnerty — average-strike (2012)	2·N(ν/2) − 1	14.1%
Asian — average-price put	2·N(σ_A·√T/2) − 1	14.6%
Concluded (option-model mean)	mean of the three	16.2%
Restricted-stock studies (cross-check)	published median, term-matched	18.0%

EXHIBIT 2

Volatility derivation — guideline public companies

Guideline company (listed comparable)	Annualized σ ≈

KEY INPUTS

Equity volatility (σ)45%

Expected holding period2.0 yrs

Risk-free rate (term-matched)4.3%

Marketable equity value$50.0M

Less: DLOM$(8.1M)

Non-marketable value$41.9M

METHOD NOTES

Volatility (σ). Built from six real listed comparables in the analytical-instruments sector (Teledyne, Mettler-Toledo, Agilent, Waters, Revvity, Bruker; Exhibit 2). The peer median annualized volatility (~29.5%) is a large-cap figure; a private-company / size premium (+15.5%) is added — reflecting that a small, non-traded issuer is more volatile than diversified large caps — to a concluded σ of ~45%, which sets the slider default. Peer volatilities are approximate observable figures, term-matched to the expected holding period.

Chaffee (1993). Values a European at-the-money protective put over the holding period; DLOM = e^(−rT)·N(−d₂) − N(−d₁), where d₁ = (r + σ²/2)T / (σ√T) and d₂ = d₁ − σ√T. Uses the full asset volatility.

Finnerty (2012). Average-strike put capturing the average price over the restriction period; DLOM = 2·N(ν/2) − 1, with ν² = σ²T + ln[2(e^(σ²T) − σ²T − 1)] − 2·ln(e^(σ²T) − 1). Averaging reduces the effective variance, so it prints below Chaffee.

Asian average-price put. DLOM = 2·N(σ_A·√T/2) − 1, with σ_A = σ/√3 — the volatility of the continuous time-average — reflecting that an averaging feature dampens dispersion.

Risk-free rate. Term-matched U.S. Treasury yield to the expected holding period.

Note on data. The DLOM models are exact and computed live (Chaffee 1993; Finnerty 2012; Asian average-price put). The volatility input is derived from real listed comparables (approximate annualized figures, Exhibit 2) plus a size premium. The subject — Larkfield Instruments — and the $50M marketable value are illustrative, because a real DLOM is company-specific and its private-company facts are not public. Not a valuation opinion or investment advice; a live engagement documents guideline-company selection, the holding-period estimate, and the volatility build in full.