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Financial Times Guide to Corporate Valuation, The, 2nd Edition
book

Financial Times Guide to Corporate Valuation, The, 2nd Edition

by David Frykman, Jakob Tolleryd
September 2012
Intermediate to advanced content levelIntermediate to advanced
216 pages
5h 59m
English
FT Publishing International
Content preview from Financial Times Guide to Corporate Valuation, The, 2nd Edition
5
Ratio-based valuation 51
The criticism against multiples, on the other hand, is that they are:
Too simplistic. A valuation multiple has to focus on only one variable
and it may not accurately reflect other value-driving variables at play.
For example, when doing a relative valuation of company B, if an EBIT
multiple from comparable company A is used, a faster growth in the
revenues of company B might be neglected. In other words, multiple
valuations can miss company-specific value drivers (or value destroy-
ers) and may not properly consider the operating or strategic dynamics
in the underlying business.
Propensity for inaccuracy. When conducting a relative multiple
valuation, you are in fact letting other investors do the ...
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Publisher Resources

ISBN: 9780273729112