The Dark Side of Valuation

How do analysts deal with the valuation issues that characterize firms with intangible assets? In many cases, they ignore these issues and trust historical data or management-provided forecasts of the numbers. In some cases, they fall back on the defense that all the firms in a sector should be equally impacted by these accounting rules and that comparisons across the firms therefore should be unaffected.

Exogenous Growth

The biggest problem with treating capital expenses (such as R&D, training, and brand advertising expenses) as operating expenses is that we lose the most potent tool that we have not only for estimating growth but also for checking for internal consistency. The growth rates we use for a firm have ...

Get The Dark Side of Valuation: Valuing Young, Distressed, and Complex Businesses, Second Edition now with the O’Reilly learning platform.

O’Reilly members experience books, live events, courses curated by job role, and more from O’Reilly and nearly 200 top publishers.