The Dark Side of Valuation

Given these valuation issues, analysts who value companies that have spread across businesses and countries have adopted a combination of mechanisms. Some of them are acceptable compromises given the absence of information, and others can lead to valuation fiascos. This section focuses on the latter.

Discounted Cash Flow Valuation

In valuing multibusiness, multinational companies, we face two challenges. One is dealing with the different characteristics in terms of risk, cash flows, and growth that different businesses have. The other is analyzing how to deal with different risk exposures in different countries. In many cases, analysts choose to either assume that using consolidated numbers will take care of the problem ...

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