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

Conclusion

Some companies are easier to value than others. When we have to leave the comfort zone of companies with solid earnings and predictable futures, we invariably stray into the dark side of valuation. Here we invent new principles, violate established ones, and come up with unsustainable values for businesses.

This chapter described the four inputs that we have to estimate to value any company:

• The expected cash from investments that the business has already made (existing assets)

• The value that will be added by new investments (growth assets)

• The risk in these cash flows

• The point in time where we expect the firm to become a mature firm

The estimation challenges we face will vary widely across companies, so we must consider how estimation ...