The Dark Side of Valuation: Valuing Young, Distressed, and Complex Businesses, Second Edition

the Definitive Guide To Valuing Hard-to-value Companies: Now Fully Revised For Today’s Financial Markets financial Professionals Have Long Faced The Challenge Of Accurately Valuing Companies That Are Difficult To Value Using Conventional Methodologies. Years Ago, This Challenge Was Most Keenly Felt In The “dot-com” Industries, And Many Professionals Fell Victim To The “dark Side,” Creating Values That Were Simply Unsustainable. Now, Amidst Today’s Global Financial Crisis, The Same Challenge Applies To A Far Wider Spectrum Of Enterprises And Assets, Ranging From Asian Equities To Mortgage-backed Securities And Financial Services Firms. Aswath Damodaran Has Thoroughly Revised This Book, Broadening Its Perspective To Consider All Companies That Resist Easy Valuation. He Covers The Entire Corporate Lifecycle, From “idea” And “nascent Growth” Companies To Those In Decline And Distress, And Offers Specific Guidance For Valuing Technology, Human Capital, Commodity, And Cyclical Firms. Damodaran Places Special Emphasis On The Financial Sector, Illuminating The Implications Of Today’s Radically Changed Credit Markets For Valuation. Along The Way, He Addresses Valuation Questions That Have Suddenly Gained Urgency, Ranging From “are U.s. Treasuries Risk Free?” To “how Do You Value Assets In Highly Illiquid Markets?” Vanquishing The “dark Side” overcoming The Temptation To Use Unrealistic Or Simplistic Valuation Methods Revisiting The Macro Inputs That Go Into Valuation what You Must Know About Risk-free Rates, Risk Premiums, And Other Macroeconomic Assumptions Valuing Idea And Nascent Companies: The First Stages Of Entrepreneurial Valuation intelligent Analysis For Angel And Early Venture Capital Investing Special Challenges Associated With Valuing Financial Services Firms includes New Insights Into Projecting The Impact Of Regulatory Changes Best Practices And Proven Solutions From The World’s #1 Expert In Valuation, Aswath Damodaran Now Covers All Industries And All Stages Of The Corporate Lifecycle Includes Extensive New Coverage Of Valuing Financial Services And Commodities Companies what’s That Company Or Asset Really Worth? the Question Is More Urgent Than Ever: We’ve All Discovered The Havoc That Can Be Caused By Misvaluing Assets And Companies. But Some Assets Are Extremely Difficult To Price With Traditional Methods. To Accurately Value Them, Start With The Techniques And Best Practices In This Book. renowned Valuation Expert Aswath Damodaran Reviews The Core Tools Of Valuation, Examines Today’s Most Difficult Estimation Questions And Issues, And Then Systematically Addresses The Valuation Challenges That Arise Throughout A Firm’s Lifecycle. Next, He Turns To Specific Types Of Hard-to-value Firms, Including Commodity Firms, Cyclical Companies, Financial Services Firms, Organizations Dependent On Intangible Assets, And Global Firms Operating Diverse Businesses. damodaran’s Insights Will Be Indispensable To Everyone Involved In Valuation: Financial Professionals, Investors, M&a Specialists, And Entrepreneurs Alike. The comprehensive guide to valuing technology companies Projections for future revenues, earnings, cash flows, the impact of stock options, and more 5 detailed case studies cover the entire tech lifecycle: Amazon.com, Ariba, Cisco, Motorola, and a new IPO Presented by one of the world's leading experts in valuation State-of-the-art tools for assessing the value of any technology company Technology companies have exploded in importance, yet investors and analysts face unprecedented challenges in valuing them. In The Dark Side of Valuation, one of the world's leading valuation experts reviews every approach, demonstrating exactly how to adapt traditional techniques to minimize risks and maximize returns. Aswath Damodaran begins with an overview of the markets' dramatic shift towards technology stocks - specifically new technology stocks. He then identifies key valuation principles and techniques, demonstrating them through five case studies that encompass the entire technology company lifecycle: Amazon.com, Ariba, Cisco, Motorola, and a new IPO-ready startup. Coverage includes: Adaptation of discounted cash flow models for tech companies with limited histories, shifting business mixes, and volatile stock prices The limitations of traditional accounting definitions in measuring technology company cash flows Superior processes for estimating future revenues, earnings, and cash flows Evaluation of the impact of management and employee stock options on share value and earnings multiples An in-depth assessment of PEG and price-to sale ratios Relative valuation: fundamentals, earnings multiples, and revenue multiples "What a refreshing book to read! Damodaran's book is essential if capital markets are going to accurately gauge the contributions of emerging companies...His insights are illuminating and his mastery of financial analysis is unmatched." -Louis Columbus Director of Marketing, Linksys Renowned valuation expert Aswath Damodaran reviews the core tools of valuation, examines today's most difficult estimation questions and issues, and then systematically addresses the valuation challenges that arise throughout a firm's lifecycle in The Dark Side of Valuation: Valuing Young, Distressed and Complex Businesses . In this thoroughly revised edition, he broadens his perspective to consider all companies that resist easy valuation, highlighting specific types of hard-to-value firms, including commodity firms, cyclical companies, financial services firms, organizations dependent on intangible assets, and global firms operating diverse businesses. He covers the entire corporate lifecycle, from "idea" and "nascent growth" companies to those in decline and distress, and offers specific guidance for valuing technology, human capital, commodity, and cyclical firms. Damodaran places special emphasis on the financial sector, illuminating the implications of today's radically changed credit markets for valuation and addresses valuation questions that have suddenly gained urgency, ranging from "Are U.S. treasuries risk free?" to "How do you value assets in highly illiquid markets?" Readers will gain insight into: · Overcoming the temptation to use unrealistic or simplistic valuation methods · Risk-free rates, risk premiums and other macroeconomic assumptions · Intelligent analysis for angel and early venture capital investing · Projecting the impact of regulatory changes · The stages of the corporate lifecycle · Valuing financial services and commodities companies Damodaran's insights will be indispensable to everyone involved in valuation: financial professionals, investors, M&A specialists, and entrepreneurs alike The dark side of valuation Intrinsic valuation Probabalistic valuation : scenario analysis, decision trees and simulation Relative valuation Real option valuation A shaky base : a risky, risk free rate Risky ventures : assessing the price of risk Macro matters : the real economy Baby steps : valuing young and start-up companies Shooting stars : valuing growth companies Not so staid : valuing mature companies The inevitable end : valuing companies in distress and decline Ups and down : valuing cyclical and commodity companies Mark to market : valuing financial service companies Invisible investments : valuing firms with intangible assets Volatility rules : valuing emerging market companies The octopus : valuing multi-business, global companies Lighting the way : vanquishing the dark side. "In 1990, the largest firms, in terms of market capitalization, in the world were industrial and natural resource giants that had been in existence for much of the century."