Dark Side of Valuation, The

Description

1. 1 The Dark Side of Valuation Enlightenment: The Tools
2. Intrinsic Valuation
3. Probabilistic Valuation: Scenario Analysis, Decision Trees & Simulations
4. Relative Valuation
5. Option Valuation
6. The Dark Side of Macro Inputs
7. A Shaky Base: A Risky Risk free Rate
8. Risky Ventures: Assessing the Price of Risk
9. Macro Matters: The Real Economy
10. The Dark Side across the Life Cycle
11. Baby Steps – Valuing start-ups
12. Off to School – Valuing young companies
13. Shooting Stars – Valuing growth companies
14. Not so staid – Valuing mature companies
15. The inevitable end – Valuing companies in distress and decline
16. The Dark Side across company types
17. Ups and Down: Valuing Cyclical and Commodity companies
18. Mark to Market: Valuing Financial Service companies
19. Invisible Investments: Valuing firms with intangible assets
20. Volatility Rules: Valuing Emerging Market companies
21. The Octopus: Valuing Multi-business, global companies
22. Puzzle Palace: Valuing the Unusual
23. The Finale
24. Lighting the Way: Vanquishing the Dark Side

The Definitive Guide to Valuing Hard-to-Value Companies: Fully Revised for Today’s Financial Markets

Valuing money-making companies that have long histories and established business models is straightforward. It is when you encounter difficult-to-value companies that you feel the urge to go over to the dark side of valuation—where you abandon first principles and create new metrics. Aswath Damodaran looks at a range of these companies, from start-ups in new businesses to distressed companies, from banks facing regulatory turmoil to commodity firms, and from emerging market upstarts to multinationals that spread across geographies and businesses. With each grouping, he helps you examine the call of the dark side and its practices and frameworks to value these firms.

To answer these questions, Aswath looks at companies across the life cycle and in different markets, from Uber and Shake Shack at one end of the spectrum to Vale, Royal Dutch, and United Technologies at the other end.

In the process, you learn how to

• Deal with “abnormally low” and negative risk-free rates in valuation
• Adapt to dynamic and changing risk premiums
• Value young companies that are disrupting existing businesses
• Analyze commodity and cyclical companies across cycles
• Value a company as the sum of its parts or as an aggregation of its users/subscribers and customers
• Determine the difference between pricing and valuation, and why some investments can only be priced

1. Updated or new examples in every chapter
2. Two new chapters, one on valuing idea/concept companies at the start of the life cycle section and one on valuing unusual businesses in the last section.
3. Discussions of how to deal with negative or very low interest rates and frontier market valuations.
4. Online support with YouTube videos, blog posts and additional material for the book.

• Well known and respected author in this area
• Updates to new edition include dealing with low or negative interest rates and valuing companies that don’t fit a traditional model
• Gives investors tools to deal with uncertainty head on rather than hiding from it
• Online support with YouTube videos, blog posts and additional material related to the book

Learn how to

• Deal with “abnormally low” and negative risk-free rates in valuation
• Adapt to dynamic and changing risk premiums
• Value young companies that are disrupting existing businesses
• Analyze commodity and cyclical companies across cycles
• Value a company as the sum of its parts or as an aggregation of its users/subscribers and customers
• Determine the difference between pricing and valuation, and why some investments can only be priced

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, the author looks at how best to deal with low interest rates, volatile equity risk premiums and political risk in valuation.

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.

Aswath Damodaran is Professor of Finance at the Stern School of Business at New York University. He teaches the corporate finance and equity valuation courses in the MBA program. He received his MBA and PhD from the University of California at Los Angeles. He has written several books on corporate finance, valuation, and portfolio management. He has been at NYU since 1986 and has received the Stern School of Business Excellence in Teaching Award (awarded by the graduating class) eight times. He was profiled in BusinessWeek as one of the top twelve business school professors in the United States in 1994 and was chosen the most popular business school professor in 2012.

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