Partial sales of lumpy assets

Using a new dataset, we study the pricing of a partial interest in a lumpy asset. Ex ante, it is unclear what a partial interest is worth due to countervailing factors which include asset quality, control benefits, asymmetrical information, and illiquidity. Contrary to the partial sale discount norm in IRS tax rules, court rulings, and appraisal methodology, we find that partial interests typically trade at a price premium. We identify salient factors that account for this premium. We find lower premiums exist for partnership buyouts compared to new outside buyers. No premium exists for a 50% co‐control stake.