5. Company Valuation

Executives focus on the valuation of their companies, some almost obsessively so. Particularly, since those executives who are responsible for public companies are scrutinized. The investment community continually assesses the valuation or stock price of companies. The valuation is based on management skill and missteps, the environment in which the business operates and competes, and how well executives run their companies. Returns to investors are also important; often an executive’s tenure and compensation rests on his or her ability to maximize investor returns. Another consideration, if companies are planning to sell or to be acquired by another company or investment firm, a higher valuation means a higher return for ...

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