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

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


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Guide to valuing companies in all stages and industries, fully revised to reflect today's financial markets and crisis.

  • Indispensable, up-to-the-minute guidance from the world's #1 expert in corporate valuation, Aswath Damodaran.
  • Expanded to include detailed coverage of companies in financial services, real estate, infrastructure, human capital, commodity, and cyclical markets.
  • Answers crucial valuation questions that have suddenly emerged in the wake of the global financial crisis.
  • Description

    • Copyright 2010
    • Edition: 2nd
    • Book
    • ISBN-10: 0-13-712689-1
    • ISBN-13: 978-0-13-712689-7

    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.

    Sample Content

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    The Dark Side of Valuation

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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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