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

The Light Side of Valuation

To value firms with intangible assets, we have to deal with the two big problems that they share. First, we have to clean up the financial statements and recategorize operating and capital expenses. The intent is not just to get a better measure of earnings, although that is a side benefit, but to get a clearer sense of what the firm is investing to generate future growth. Second, we need to deal more effectively with equity options—the ones that were granted in the past, as well as the ones we expect to be granted in the future.

Regaining Accounting Consistency

A significant shortcoming of accounting statements is how they treat investments made in intangible assests in general, and R&D expenses in particular. Under ...