Dark Side of Valuation, The: Valuing Young, Distressed, and Complex Businesses, Third edition

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The Grown-Ups: Mature Companies

Attrition occurs at each stage of the life cycle of the firm. Most young companies fail to make it through early tests to become growth companies. A large number of growth companies find that growth is short-lived and either go out of business or are acquired by larger firms. This chapter focuses on the companies that survive these grueling phases of competition and become mature companies. They are mature not only in terms of growth rates but also in terms of risk profiles and return characteristics.

Companies in the mature phase of the life cycle should present the least problems in valuations. They have long periods of operating and market history, allowing us to estimate most of the inputs for valuation ...