A Pragmatic Look at Valuation (Collection)

1. Valuation: An Overview

Market View

What do Daimler-Benz, Hewlett-Packard (HP), Microsoft, Quaker Oats, and Sprint have in common? They are all multinational companies with established brands and products. But they have something else in common: They have all made bad acquisitions! In 1994, Quaker Oats acquired Snapple for $1.7 billion; it sold Snapple to an investment company for only $300 million two years later. Daimler purchased Chrysler for $36 billion in 1998; it got only $7.4 billion when it sold 80 percent of Chrysler to a private equity firm nine years later. HP, Sprint, and Microsoft also failed to make their acquisitions of Electronic Data System, Nextel Communications, and aQuantive work. These companies had to write off a significant ...