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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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  • Copyright 2010
  • Edition: 2nd
  • eBook (Watermarked)
  • ISBN-10: 0-13-263918-1
  • ISBN-13: 978-0-13-263918-7

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

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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