The Dark Side of Valuation: Valuing Young, Distressed, and Complex Businesses, Second Edition

Valuation Across the Business Spectrum

The preceding section considered the different issues we face in estimating cash flows, growth rates, risk, and maturity across the business life cycle. In this section, we consider how firms in some businesses are more difficult to value than others. We consider five groups of companies:

• Financial services firms, such as banks, investment banks, and insurance companies

• Cyclical and commodity businesses

• Businesses with intangible assets (human capital, patents, technology)

• Emerging-market companies that face significant political risk

• Multibusiness global companies

With each group, we examine what it is about the firms within that group that generates valuation problems.

Financial Services Firms

While financial ...