The Light Side of Valuation

Emerging-market companies are not easy to value, but we can follow some commonsense rules that will both reduce the likelihood of valuation mistakes and increase transparency in the final value. We will begin by looking at techniques that are useful in discounted cash flow valuation. We will follow up by examining ways in which we can value emerging-market companies with multiples and comparables.

Discounted Cash Flow Valuation

The ingredients in a discounted cash flow valuation—cash flows and discount rates—are the same for developed-market and emerging-market companies. The challenge, then, becomes how best to incorporate the characteristics listed in the preceding section into the inputs.

Currency Consistency ...

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