The Dark Side of Valuation: Valuing Young, Distressed, and Complex Businesses / Edition 2

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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.

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Product Details

  • ISBN-13: 9780137126897
  • Publisher: FT Press
  • Publication date: 7/29/2009
  • Series: Pearson Custom Business Resources Series
  • Edition number: 2
  • Pages: 590
  • Sales rank: 354,014
  • Product dimensions: 7.30 (w) x 9.20 (h) x 1.60 (d)

Meet the Author

ASWATH DAMODARAN is Professor of Finance at the Stern School of Business at New York University and one of the world’s most highly regarded experts on valuation and finance. His books include Damodaran on Valuation, Investment Valuation, Corporate Finance: Theory and Practice, and Applied Corporate Finance: A User’s Manual. His recent book, Strategic Risk Taking, explores how we think about risk and the implications for risk management. He has received the Stern School of Business Excellence in Teaching Award seven times and was profiled in BusinessWeek as one of the top twelve U.S. business school professors.

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Table of Contents

Preface vi

Chapter 1 The Dark Side of Valuation 1

Chapter 2 Intrinsic Valuation 22

Chapter 3 Probabilistic Valuation: Scenario Analysis, Decision Trees, and Simulations 64

Chapter 4 Relative Valuation 90

Chapter 5 Real Options Valuation 114

Chapter 6 A Shaky Base: A “Risky” Risk-Free Rate 144

Chapter 7 Risky Ventures: Assessing the Price of Risk 168

Chapter 8 Macro Matters: The Real Economy 194

Chapter 9 Baby Steps: Young and Start-Up Companies 213

Chapter 10 Shooting Stars? Growth Companies 263

Chapter 11 The Grown-Ups: Mature Companies 312

Chapter 12 Winding Down: Declining Companies 361

Chapter 13 Ups and Downs: Cyclical and Commodity Companies 417

Chapter 14 Mark to Market: Financial Services Companies 449

Chapter 15 Invisible Investments: Firms with Intangible Assets 476

Chapter 16 Volatility Rules: Emerging-Market Companies 505

Chapter 17 The Octopus: Multibusiness Global Companies 535

Chapter 18 Going Over to the Light: Vanquishing the Dark Side 568

Index 576

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