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Book SynopsisEquity Valuation: Models from the Leading Investment Banks is a clear and reader-friendly guide to how today's leading investment banks analyze firms.Table of ContentsForeword. Preface. Acknowledgments. Abbreviations. Part I: Discounted Cash Flow (DCF) Models (Jan Viebig and Thorsten Poddig). 1. Introduction. 2. The Fundamental Value of Stocks and Bonds. 3. Discounted Cash Flow Models: The Main Input Factors. Part II: Monte Carlo Free Cash Flow to the Firm (MC-FCFF) Models (Deutsche Bank/DWS) (Jan Viebig and Thorsten Poddig). 4. Introduction. 5. Standard FCFF Model. 6. Monte Carlo FCFF Models. Part III: Beyond Earnings: A User's Guide to Excess Return Models and the HOLT CFROI® Framework (Tom Larsen and David Holland). 7. Introduction. 8. From Accounting to Economics - Part I. 9. From Economics to Valuation - Part I. 10. Where Does Accounting Go Wrong? 11. From Accounting to Economics: CFROI. 12. From Accounting to Economics: Economic Profit. 13. From Economics to Valuation - Part II. Appendix1. Vodafone Financial Statements and Relevant Notes for CFROI Calculation. Appendix 2: Additional Notes from Vodafone Annual Report for EP Calculation. Part IV: Morgan Stanley ModelWare's Approach to Intrinsic Value: Focusing on Risk-Reward Trade-Offs (Trevor S. Harris, Juliet Estridge and Doron Nissim). 14. Introduction. 15. Linking Fundamental Analysis to the Inputs of the Valuation Model. 16. Our Valuation Framework. 17. Linking Business Activity to Intrinsic Value Approach: The ModelWare Profitability Tree. 18. ModelWare's Instrinsic Value Approach. 19. Treatment of Key Inputs. 20. The Cost of Capital. 21. Summary and Conclusions. Appendix. Part V: UBS VCAM and EGW Regression-based Valuation (David Bianco). 22. Introducing "EGQ" - Where Intrinsic Methods and Empirical Techniques Meet. 23. A Quick Guide to DCF and Economic Profit Analysis. 24. Regression-based Valuation. 25. UBS Economic Growth Quotient. 26. UBS EGQ Regression Valuation. 27. Understanding Regressions. 28. Appendix Discussions. Part VI: Leverage Buyout (LBO) Models (Jan Viebig, Daniel Stillit and Thorsten Poddig). 29. Introduction. 30. Leveraged Buyouts. 31. IRRs and the Structure of LBO Models. 32. Assumptions of LBO Models. 33. Example: Continental AG. 34. A Word of Caution. Part VII: Valuation 101: Approaches and Alternatives (Aswath Damodaran). 35. Introduction. 36. Overview of Valuation. 37. Discounted Cash Flow Valuation. 38. Liquidation and Accounting Valuation. 39. Relative Valuation. 40. Real Option valuation. 41. Closing Thoughts on Value Enhancement. Part VIII: Final Thoughts on Valuation (Armin Varmaz, Thorsten Poddig and Jan Viebig). 42. Introduction. 43. Valuation in Theory: The Valuation of a Single Asset. 44. Outlook: The Multi-asset Valuation and Allocation Case. 45. Summary. Index.

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Book SynopsisThe Valuation Book contains the tools needed by anyone who wants to make a robust valuation of a business.No detailed prior knowledge of business valuation is required ? the book covers everything you need to know, including how to read relevant parts of company accounts and the valuation tools (including DCF and multiples) that are used by professionals.Written by academics who are also practitioners, The Valuation Book provides a unique mix of theory and practical application. It is designed around the authors? experience of teaching thousands of people about valuation principles over the last two decades.Short, accessible chapters with a consistent structure and layout allow readers to build up their knowledge step by step.And the book is fully up to date, with accessible specialist chapters on integrating ESG into valuations, valuing immature companies, identifying flaws in valuation models, valuation for mergers and acquisitions, and more.The Valuation Book is a comprehensive introductory valuation guide for investors, managers, accountants, lawyers and anyone else who needs to value a business.

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Book SynopsisAnalysis and insights from top thought leaders on a pivotal topic in investing and asset management Valuation is the cornerstone for investment analysis, and a thorough understanding and correct application of valuation methodologies are critical for long-term investing success. Edited by two leading valuation experts from CFA Institute, this book brings together the insights and expertise of some of the most astute and successful investment minds of the past 50 years. From Benjamin Graham, the father of value investing, to Aswath Damodaran, you'll learn what these investment luminaries have to say about investment valuation techniques, including earnings and cash flow analysis. Features the best thinking on valuation from the industry's masters on the topic, supplemented with dozens of fascinating and instructive real-world examples Comprehensively discusses special valuation situations, such as real options, employee stock options, highlyTable of ContentsForeword ix Introduction 1 PART I: VALUATION PERSPECTIVES: THEN AND NOW 3 CHAPTER 1 Two Illustrative Approaches to Formula Valuations of Common Stocks 5 Benjamin Graham Reprinted from the Financial Analysts Journal (November 1957):1115. CHAPTER 2 Seeking a Margin of Safety and Valuation 17 Matthew B. McLennan, CFA Reprinted from CFA Institute Conference Proceedings Quarterly (June 2011): 2734. PART II: VALUATION METHODOLOGIES 29 CHAPTER 3 Company Performance and Measures of Value Added 31 Pamela P. Peterson, CFA, and David R. Peterson Reprinted from the Research Foundation of CFA Institute (December 1996). CHAPTER 4 The Affordable Dividend Approach to Equity Valuation 93 Alfred Rappaport Reprinted from the Financial Analysts Journal (July/August 1986):5258. CHAPTER 5 Discounted-Cash-Flow Approach to Valuation 105 Gregory A. Gilbert, CFA Reprinted from ICFA Continuing Education Series (1990):2330. CHAPTER 6 Equity Securities Analysis Case Study: Merck & Company 115 Randall S. Billingsley, CFA Reprinted from AIMR Conference Proceedings: Equity Securities Analysis and Evaluation (December 1993):6395. CHAPTER 7 Traditional Equity Valuation Methods 155 Thomas A. Martin, Jr., CFA Reprinted from AIMR Conference Proceedings (May 1998):2135. CHAPTER 8 A Simple Valuation Model and Growth Expectations 177 Morris G. Danielson Reprinted from the Financial Analysts Journal (May/June 1998):5057. CHAPTER 9 Franchise Valuation under Q-Type Competition 189 Martin L. Leibowitz Reprinted from the Financial Analysts Journal (November/December 1998): 6274. CHAPTER 10 Value Enhancement and Cash-Driven Valuation Models 209 Aswath Damodaran Reprinted from AIMR Conference Proceedings: Practical Issues in Equity Analysis (February 2000):417. CHAPTER 11 FEVA: A Financial and Economic Approach to Valuation 229 Xavier Adsera` and Pere Vin˜olas Reprinted from the Financial Analysts Journal (March/April 2003):8087. CHAPTER 12 Choosing the Right Valuation Approach 243 Charles M.C. Lee Reprinted from AIMR Conference Proceedings: Equity Valuation in a Global Context (April 2003):414. CHAPTER 13 Choosing the Right Valuation Approach 259 Robert Parrino, CFA Reprinted from CFA Institute Conference Proceedings: Analyzing, Researching, and Valuing Equity Investments (June 2005):1528. CHAPTER 14 Valuing Illiquid Common Stock 279 Edward A. Dyl and George J. Jiang Reprinted from the Financial Analysts Journal (July/August 2008):4047. PART III: EARNINGS AND CASH FLOW ANALYSIS 291 CHAPTER 15 Earnings: Measurement, Disclosure, and the Impact on Equity Valuation 293 D. Eric Hirst and Patrick E. Hopkins Reprinted from the Research Foundation of CFA Institute (August 2000). CHAPTER 16 Cash Flow Analysis and Equity Valuation 349 James A. Ohlson Reprinted from AIMR Conference Proceedings: Equity Research and Valuation Techniques (May 1998):3643. CHAPTER 17 Accounting Valuation: Is Earnings Quality an Issue? 361 Bradford Cornell and Wayne R. Landsman Reprinted from the Financial Analysts Journal (November/December 2003): 2028. CHAPTER 18 Earnings Quality Analysis and Equity Valuation 375 Richard G. Sloan Reprinted from CFA Institute Conference Proceedings Quarterly (September 2006): 5260. CHAPTER 19 Is Cash Flow King in Valuations? 389 Jing Liu, Doron Nissim, and Jacob Thomas Reprinted from the Financial Analysts Journal (March/April 2007):5668. PART IV: OPTION VALUATION 407 CHAPTER 20 Employee Stock Options and Equity Valuation 409 Mark Lang Reprinted from the Research Foundation of CFA Institute (July 2004). CHAPTER 21 Employee Stock Option Valuation with an Early Exercise Boundary 465 Neil Brisley and Chris K. Anderson Reprinted from the Financial Analysts Journal (September/October 2008): 88100. PART V: REAL OPTIONS VALUATION 483 CHAPTER 22 Real Options and Investment Valuation 485 Don M. Chance, CFA, and Pamela P. Peterson, CFA Reprinted from the Research Foundation of CFA Institute (July 2002). CHAPTER 23 Real-Options Valuation for a Biotechnology Company 573 David Kellogg and John M. Charnes Reprinted from the Financial Analysts Journal (May/June 2000):7684. About the Contributors 587 Index 589

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Book SynopsisDamondaran on Valuation will not only convince you of the vitality of the many valuation models available to you, it will help ensure that you develop the acumen needed to select the right model for any valuation scenario.Table of ContentsApproaches to Valuation. Estimation of Discount Rates. Estimation of Cash Flows. Estimation of Growth Rates. Dividend-Discount Models. Free-Cash-Flow-to-Equity Discount Models. Valuing a Firm--The Free-Cash-Flow-to-Firm Approach. Special Cases in Valuation. Price/Earnings Ratios. Price/Book Value Ratios. Price/Sales Ratio. Management Decisions, Corporate Strategy, and Firm Value. Valuation for Acquisitions and Takeovers. Option-Pricing Theory. Applications of Option-Pricing Theory to Valuation. Overview and Conclusion. Appendices. References. Disk Documentation. Index.

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Book SynopsisTable of ContentsPreface xiii Acknowledgments xv About the CFA Investment Series xvii Chapter 1 Overview of Equity Securities 1 Learning Outcomes 1 1. Introduction 1 2. Equity Securities in Global Financial Markets 2 3. Types and Characteristics of Equity Securities 8 3.1. Common Shares 9 3.2. Preference Shares 11 4. Private versus Public Equity Securities 13 5. Investing in Non-Domestic Equity Securities 15 5.1. Direct Investing 17 5.2. Depository Receipts 17 6. Risk and Return Characteristics of Equity Securities 21 6.1. Return Characteristics of Equity Securities 21 6.2. Risk of Equity Securities 22 7. Equity Securities and Company Value 23 7.1. Accounting Return on Equity 24 7.2. The Cost of Equity and Investors’ Required Rates of Return 28 8. Summary 29 References 31 Practice Problems 31 Chapter 2 Introduction to Industry and Company Analysis 35 Learning Outcomes 35 1. Introduction 36 2. Uses of Industry Analysis 36 3. Approaches to Identifying Similar Companies 37 3.1. Products and/or Services Supplied 37 3.2. Business-Cycle Sensitivities 38 3.3. Statistical Similarities 39 4. Industry Classification Systems 40 4.1. Commercial Industry Classification Systems 40 4.2. Governmental Industry Classification Systems 44 4.3. Strengths and Weaknesses of Current Systems 45 4.4. Constructing a Peer Group 46 5. Describing and Analyzing an Industry 50 5.1. Principles of Strategic Analysis 52 5.2. External Influences on Industry Growth, Profitability, and Risk 70 6. Company Analysis 77 6.1. Elements That Should Be Covered in a Company Analysis 77 6.2. Spreadsheet Modeling 80 7. Summary 81 References 84 Practice Problems 84 Chapter 3 Equity Valuation: Concepts and Basic Tools 89 Learning Outcomes 89 1. Introduction 90 2. Estimated Value and Market Price 90 3. Major Categories of Equity Valuation Models 92 4. Present Value Models: The Dividend Discount Model 94 4.1. Dividends: Background for the Dividend Discount Model 94 4.2. The Dividend Discount Model: Description 96 4.3. Preferred Stock Valuation 100 4.4. The Gordon Growth Model 103 4.5. Multistage Dividend Discount Models 108 5. Multiplier Models 112 5.1. Relationships among Price Multiples, Present Value Models, and Fundamentals 112 5.2. The Method of Comparables 116 5.3. Illustration of a Valuation Based on Price Multiples 119 5.4. Enterprise Value 121 6. Asset-Based Valuation 123 7. Summary 127 References 129 Practice Problems 129 Chapter 4 Equity Valuation: Applications and Processes 135 Learning Outcomes 135 1. Introduction 135 2. Value Definitions and Valuation Applications 136 2.1. What is Value? 136 2.2. Applications of Equity Valuation 139 3. The Valuation Process 141 3.1. Understanding the Business 142 3.2. Forecasting Company Performance 152 3.3. Selecting the Appropriate Valuation Model 153 3.4. Converting Forecasts to a Valuation 160 3.5. Applying the Valuation Conclusion: The Analyst’s Role and Responsibilities 161 4. Communicating Valuation Results 163 4.1. Contents of a Research Report 163 4.2. Format of a Research Report 165 4.3. Research Reporting Responsibilities 166 5. Summary 168 References 169 Practice Problems 170 Chapter 5 Return Concepts 177 Learning Outcomes 177 1. Introduction 177 2. Return Concepts 178 2.1. Holding Period Return 178 2.2. Realized and Expected (Holding Period) Returns 179 2.3. Required Return 179 2.4. Expected Return Estimates from Intrinsic Value Estimates 181 2.5. Discount Rate 183 2.6. Internal Rate of Return 183 3. The Equity Risk Premium 184 3.1. Historical Estimates 186 3.2. Forward-Looking Estimates 194 4. The Required Return on Equity 198 4.1. The Capital Asset Pricing Model 198 4.2. Multifactor Models 206 4.3. Build-Up Method Estimates of the Required Return on Equity 213 4.4. The Required Return on Equity: International Issues 217 5. The Weighted Average Cost of Capital 218 6. Discount Rate Selection in Relation to Cash Flows 220 7. Summary 220 References 222 Practice Problems 223 Chapter 6 Industry and Company Analysis 229 Learning Outcomes 229 1. Introduction 230 2. Financial Modeling: An Overview 230 2.1. Income Statement Modeling: Revenue 230 2.2. Income Statement Modeling: Operating Costs 236 2.3. Income Statement Modeling: Non-operating Costs 249 2.4. Income Statement Modeling: Other Items 253 2.5. Balance Sheet and Cash Flow Statement Modeling 254 2.6. Scenario Analysis and Sensitivity Analysis 256 3. The Impact of Competitive Factors on Prices and Costs 258 4. Inflation and Deflation 266 4.1. Sales Projections with Inflation and Deflation 267 4.2. Cost Projections with Inflation and Deflation 272 5. Technological Developments 274 6. Long-Term Forecasting 285 Case Study: Estimating Normalized Revenue 286 7. Building a Model 291 7.1. Industry Overview 291 7.2. Company Overview 292 7.3. Construction of Pro Forma Income Statement 293 7.4. Construction of Pro Forma Cash Flow Statement and Balance Sheet 299 7.5. Valuation Inputs 304 8. Summary 305 References 306 Practice Problems 306 Chapter 7 Discounted Dividend Valuation 313 Learning Outcomes 313 1. Introduction 314 2. Present Value Models 315 2.1. Valuation Based on the Present Value of Future Cash Flows 315 2.2. Streams of Expected Cash Flows 317 3. The Dividend Discount Model 322 3.1. The Expression for a Single Holding Period 323 3.2. The Expression for Multiple Holding Periods 324 4. The Gordon Growth Model 326 4.1. The Gordon Growth Model Equation 326 4.2. The Links Among Dividend Growth, Earnings Growth, and Value Appreciation in the Gordon Growth Model 334 4.3. Share Repurchases 334 4.4. The Implied Dividend Growth Rate 335 4.5. The Present Value of Growth Opportunities 336 4.6. Gordon Growth Model and the Price-to-Earnings Ratio 339 4.7. Estimating a Required Return Using the Gordon Growth Model 341 4.8. The Gordon Growth Model: Concluding Remarks 342 5. Multistage Dividend Discount Models 342 5.1. Two-Stage Dividend Discount Model 343 5.2. Valuing a Non-Dividend-Paying Company 346 5.3. The H-Model 347 5.4. Three-Stage Dividend Discount Models 349 5.5. Spreadsheet (General) Modeling 354 5.6. Estimating a Required Return Using Any DDM 356 5.7. Multistage DDM: Concluding Remarks 357 6. The Financial Determinants of Growth Rates 358 6.1. Sustainable Growth Rate 358 6.2. Dividend Growth Rate, Retention Rate, and ROE Analysis 360 6.3. Financial Models and Dividends 363 7. Summary 365 References 367 Practice Problems 368 Chapter 8 Free Cash Flow Valuation 383 Learning Outcomes 383 1. Introduction to Free Cash Flows 384 2. FCFF and FCFE Valuation Approaches 385 2.1. Defining Free Cash Flow 385 2.2. Present Value of Free Cash Flow 386 2.3. Single-Stage (Constant-Growth) FCFF and FCFE Models 387 3. Forecasting Free Cash Flow 389 3.1. Computing FCFF from Net Income 389 3.2. Computing FCFF from the Statement of Cash Flows 393 3.3. Noncash Charges 394 3.4. Computing FCFE from FCFF 400 3.5. Finding FCFF and FCFE from EBIT or EBITDA 405 3.6. FCFF and FCFE on a Uses-of-Free-Cash-Flow Basis 407 3.7. Forecasting FCFF and FCFE 409 3.8. Other Issues in Free Cash Flow Analysis 414 4. Free Cash Flow Model Variations 419 4.1. An International Application of the Single-Stage Model 420 4.2. Sensitivity Analysis of FCFF and FCFE Valuations 421 4.3. Two-Stage Free Cash Flow Models 422 4.4. Three-Stage Growth Models 430 4.5. ESG Considerations in Free Cash Flow Models 431 5. Nonoperating Assets and Firm Value 436 6. Summary 436 References 438 Practice Problems 438 Chapter 9 Market-Based Valuation: Price and Enterprise Value Multiples 455 Learning Outcomes 455 1. Introduction 456 2. Price and Enterprise Value Multiples in Valuation 457 2.1. The Method of Comparables 457 2.2. The Method Based on Forecasted Fundamentals 459 3. Price Multiples 460 3.1. Price to Earnings 460 3.2. Price to Book Value 492 3.3. Price to Sales 503 3.4. Price to Cash Flow 510 3.5. Price to Dividends and Dividend Yield 515 4. Enterprise Value Multiples 518 4.1. Enterprise Value to EBITDA 519 4.2. Other Enterprise Value Multiples 524 4.3. Enterprise Value to Sales 525 4.4. Price and Enterprise Value Multiples in a Comparable Analysis: Some Illustrative Data 526 5. International Considerations When Using Multiples 528 6. Momentum Valuation Indicators 529 7. Valuation Indicators: Issues in Practice 535 7.1. Averaging Multiples: The Harmonic Mean 535 7.2. Using Multiple Valuation Indicators 537 8. Summary 542 References 544 Practice Problems 546 Chapter 10 Residual Income Valuation 559 Learning Outcomes 559 1. Introduction 560 2. Residual Income 560 2.1. The Use of Residual Income in Equity Valuation 563 2.2. Commercial Implementations 564 3. The Residual Income Model 565 3.1. The General Residual Income Model 568 3.2. Fundamental Determinants of Residual Income 573 3.3. Single-Stage Residual Income Valuation 574 3.4. Multistage Residual Income Valuation 575 4. Residual Income Valuation in Relation to Other Approaches 580 4.1. Strengths and Weaknesses of the Residual Income Model 582 4.2. Broad Guidelines for Using a Residual Income Model 583 5. Accounting and International Considerations 584 5.1. Violations of the Clean Surplus Relationship 585 5.2. Balance Sheet Adjustments for Fair Value 594 5.3. Intangible Assets 594 5.4. Nonrecurring Items 597 5.5. Other Aggressive Accounting Practices 598 5.6. International Considerations 598 6. Summary 599 References 601 Practice Problems 602 Chapter 11 Private Company Valuation 611 Learning Outcomes 611 1. Introduction 612 2. The Scope of Private Company Valuation 612 2.1. Private and Public Company Valuation: Similarities and Contrasts 612 2.2. Reasons for Performing Valuations 614 3. Definitions (Standards) of Value 616 4. Private Company Valuation Approaches 618 4.1. Earnings Normalization and Cash Flow Estimation Issues 619 4.2. Income Approach Methods of Private Company Valuation 625 4.3. Market Approach Methods of Private Company Valuation 635 4.4. Asset-Based Approach to Private Company Valuation 643 4.5. Valuation Discounts and Premiums 644 4.6. Business Valuation Standards and Practices 651 5. Summary 652 References 654 Practice Problems 654 Glossary 661 About the Editors 671 About the CFA Program 673 Index 675

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Book SynopsisThe market approach aims to establish the value of a company based on how similar firms are priced on the stock exchange or through company transactions. Using the market approach, price-related indicators such as price to earnings, sales and book values are utilised. An ever-present problem however, is that different valuation multiples and valuation methodologies tend to provide the analyst with contradictory outputs. The solution to this problem so far has been to claim that the market approach is more art than science, thus providing the analyst with the freedom to alter the multiples at their own discretion to reach a uniform value or range. Valuation: The Market Approach puts an end to this problem, providing the reader with a rational scientific-based understanding and the necessary tools to perform a sound market approach valuation, or if reviewing such valuations, provide the tools to challenge the work of the arts-based senior experts. The book begins Table of ContentsAcknowledgments ix Introduction 1 1 Corporate Valuation 5 1.1 The discounted cash flow approach 5 1.2 The market approach 6 1.3 The net asset approach 6 2 What Value? 9 2.1 Standard of values 9 2.2 Marketability and control 11 2.2.1 Marketability (liquidity) 11 2.2.2 Control 11 2.2.3 Adjusting formarketability and control 13 3 Exchange-traded Shares vs. Transactions 19 3.1 Exchange-traded shares 19 3.2 Transactions 20 4 How to Put the Peer Group Together 23 4.1 The selection process 23 4.1.1 Geography 23 4.1.2 Business model 23 4.2 How many comparables? 26 4.3 Analyzing the history 26 5 Market Value of Equity vs. Market Value of Operating / Invested Capital 29 5.1 Market value of equity 29 5.2 Market value of operating/invested capital 29 6 The Value Multiples 39 6.1 EV multiples 40 6.2 Pmultiples 42 6.3 Other details to consider 47 7 The Value Drivers 49 7.1 Primary value drivers of the EV multiples 49 7.2 Primary value drivers of the Pmultiples 50 7.3 Assumptions regarding value drivers 50 8 Applying the Market Approach in Practice 53 8.1 The case study 53 8.1.1 EV/Sales 56 8.1.2 EV/EBIT 79 8.1.3 EV/BEV 87 8.1.4 Some closing remarks 90 8.2 Risk 96 8.2.1 The discounted cash flow approach (DCF) 97 8.2.2 Forecasted cash flows 105 8.2.3 Cost of capital (discount rate) 106 8.2.4 Cost of equity (Ke) 107 8.2.5 The capital asset pricing model (CAPM) 107 8.2.6 Adjusted CAPM 114 8.2.7 Cost of debt (Kd) 118 8.2.8 Capital structure 119 8.2.9 Weighted average cost of capital (WACC) 120 8.3 Summary of calculated values 130 8.3.1 EV multiples 130 8.3.2 Price multiples – short tuning 131 8.3.3 Concluding remarks 137 9 Using the Market Approach for Reconciliation 141 9.1 The discounted cash flow value of Engineering Corp 141 9.1.1 EV/Sales 146 9.1.2 EV/EBIT 158 9.1.3 EV/BEV 165 9.1.4 Some closing remarks 166 10 Forward-looking Value Multiples 173 11 Summary and Concluding Remarks 181 12 Epilog 189 Appendix: Brief Derivation of the Respective Value Multiple's Individual Value Drivers 191 Index 197

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Book SynopsisNo one has a clearer understanding of valuation than does Al King. He knows the nuts and bolts of this subject, as well as its intricacies, because he has practiced his profession on the factory floor, in the boardroom, and in the courtroom. The mathematics of valuation is easy to understand. Applying the underlying principles to the ever-growing myriad of business assets and issues is very difficult. Only a handful of valuation professionals have the breadth of knowledge and experience necessary to meet that challenge. The author of this book is one of them, and he conveys that experience in a readable style. He writes as he speaks- clearly and to the point. Anyone who wishes to understand the appraisal process as it pertains to business assets needs this book. --Gordon V. Smith, President, AUS Consultants Al King''s Valuation: What Assets Are Really Worth aims to give the reader a deep understanding of what ''value'' really means-and it succeeds brilliantly. King clearly explainsTable of Contents1. Cost, Value, and Price 12. Accounting for Value, Not Cost: Financial Reporting at the Crossroads 143. Investing for Value: Buying and Selling Assets 434. Adversarial Nature of Valuations: "Why Can't I Get A Higher (Lower) Answer?" 545. Cost Approach to Value 756. Income Approach to Value 917. Market Comparable Approach to Value 1078. Can Value Information Be Objective and Independent? 1299. What Will Happen in the Future? Why Assumptions Are Critical in the Valuation Process 14210. Hiring an Appraiser; Reading an Appraisal Report 15711. Providing Value Information to Shareholders and Analysts 16912. Allocation of Purchase Price: Tangible Assets 18013. Allocation of Purchase Price: Intangible Assets 20014. Good Property Records Increase Value and Save Money 22415. Don't Overpay Property Taxes! 24916. Adopting SFAS 141 and SFAS 142 26117. Valuing a Start-up Firm: Cheap Stock Options 275Index 289

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Book SynopsisJonathan Berk is the A. P. Giannini Professor of Finance at the Graduate School of Business, Stanford University and is a Research Associate at the National Bureau of Economic Research. Before coming to Stanford, he was the Sylvan Coleman Professor of Finance at the Haas School of Business at the University of California, Berkeley. Prior to earning his PhD, he worked as an Associate at Goldman Sachs (where his education in finance really began). Professor Berk's research interests in finance include corporate valuation, capital structure, mutual funds, asset pricing, experimental economics, and labor economics. His work has won a number of research awards including the Stephen A. Ross Prize in Financial Economics, TIAA-CREF Paul A. Samuelson Award, the Smith Breeden Prize, Best Paper of the Year in The Review of Financial Studies, and the FAME Research Prize. His paper, A Critique of Size-Related Anomalies, was selected as one of the 2 best paperTable of ContentsBrief Contents PART 1: Introduction The Corporation and Financial Markets Introduction to Financial Statement Analysis Financial Decision Making and the Law of One Price PART 2: Time, Money, and Interest Rates The Time Value of Money Interest Rates Valuing Bonds PART 3: Valuing Projects and Firms Investment Decision Rules Fundamentals of Capital Budgeting Valuing Stocks PART 4: Risk and Return Capital Markets and the Pricing of Risk Optimal Portfolio Choice and the Capital Asset Pricing Model Estimating the Cost of Capital Investor Behavior and Capital Market Efficiency PART 5: Capital Structure Capital Structure in a Perfect Market Debt and Taxes Financial Distress, Managerial Incentives, and Information Payout Policy PART 6: Advanced Valuation Capital Budgeting and Valuation with Leverage Valuation and Financial Modeling: A Case Study PART 7: Options Financial Options Option Valuation Real Options PART 8: Long-Term Financing Raising Equity Capital Debt Financing Leasing PART 9: Short-Term Financing Working Capital Management Short-Term Financial Planning PART 10: Special Topics Mergers and Acquisitions Corporate Governance Risk Management International Corporate Finance

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Book SynopsisProvides a revolutionary conceptual framework and practical tools to quantify uncertainty and recognize the value of flexibility in real estate developmentThis book takes a practical engineering approach to the valuation of options and flexibility in real estate. It presents simple simulation models built in universal spreadsheet software such as Microsoft Excel. These realistically reflect the varying and erratic sources of uncertainty and price dynamics that uniquely characterize real estate. The text covers new analytic procedures that are valuable for existing properties and enable a new, more profitable perspective on the planning, design, operation, and evaluation of large-scale, multi-phase development projects. The book thereby aims to significantly improve valuation and investment decision making.Flexibility and Real Estate Valuation under Uncertainty: A Practical Guide for Developers is presented at 3 levels. First, it introduces and explains thTable of ContentsForeword xiii Author’s Preface xvii Acknowledgement xxi About the Companion Website xxiii 1 Discounted Cash Flow Valuation: The Basic Procedures and Concepts Underlying Spreadsheet Valuation Constitute the Springboard to our Approach of Analyzing Flexibility Under Uncertainty 1 1.1 Why the Focus on the Discounted Cash Flow Model? 2 1.2 Structure of a Discounted Cash Flow Spreadsheet 3 1.3 The Cash Flow Projection 5 1.4 Discount Rate 7 1.5 Market Value and Forward‐Looking (Ex‐Ante) Analysis 7 1.6 Backward‐Looking (Ex‐Post) Analysis 9 1.7 Conclusion 9 2 Economics of the Discounted Cash Flow Valuation Model: Understanding the Discount Rate is Critical 11 2.1 Choice of Discount Rate 11 2.2 Differences between Discount Rate, Opportunity Cost of Capital, and Internal Rate of Return 13 2.3 Net Present Value 14 2.4 Relationship between Discount Rate, Growth Rate, and Income Yield 15 2.5 Relationship between Discount Rate and Risk 18 2.6 Conclusion 19 3 Future Scenarios Matter: We Need to Recognize that Future Projections are Uncertain 21 3.1 The Standard Discounted Cash Flow Model Appears to be Deterministic 21 3.2 We Live in a World of Uncertainty 23 3.3 Discounted Cash Flow Pro Forma Cash Flows are Expectations 24 3.4 Flexibility and Options 26 3.5 Conclusion 26 4 Scenario Analysis: Future Scenarios can Significantly and Surprisingly Affect the Present Value 27 4.1 Discounted Cash Flow Scenario Analysis 27 4.2 Scenarios Affect Value 29 4.3 Flexibility Has Value 30 4.4 Conclusion 32 5 Future Outcomes Cover a Range of Possibilities: We Can Describe Uncertainties in Real Estate Using Probability Distributions of Possible Future Outcomes 33 5.1 Distribution of Future Outcomes 34 5.2 Quantifying Input Distributions 34 5.3 Distributions of Outcomes Differ from Distributions of Inputs 38 5.4 Flaw of Averages 39 5.5 Conclusion 40 6 Simulation of Outcomes: Simulation is a Practical, Efficient Way to Explore Uncertainty and to choose between Alternative Strategies for Managing it 41 6.1 Generating Scenarios 41 6.2 Real Estate Simulation in a Nutshell 42 6.3 Simulation is an Efficient Process 43 6.4 Number of Trials 44 6.5 Conclusion 45 7 Modeling Price Dynamics: Using Pricing Factors to Model the Dynamics of Real Estate Markets 47 7.1 Pricing Factors 47 7.2 Random Walks 49 7.3 Real Estate Pricing Factor Dynamics 51 7.4 Conclusion 52 8 Interpreting Simulation Results: Target Curves and Scatterplots can be used to Graph the Distribution of the Sample Output 53 8.1 Target Curves 53 8.2 Comparing Target Curves 57 8.3 Value at Risk 57 8.4 Scatterplots 57 8.5 Conclusion 59 9 Resale Timing Decision: Analysis: Let’s See what happens when we apply the Tools of Flexibility Analysis to a Classical Investment Decision: when to sell the Property 61 9.1 The Resale Timing Problem 62 9.2 Extending the Time Horizon of the Discounted Cash Flow Model 62 9.3 IF Statements 63 9.4 Trigger Value for Stop‐Gain Rule 64 9.5 Value of Example Stop‐Gain Rule 64 9.6 Conclusion 68 10 Resale Timing Decision: Discussion: Let’s think about Additional Insights we can get from Simulation 69 10.1 Sensitivity Analysis 69 10.2 When to Use the Stop‐Gain Rule 70 10.3 Implications of Flexibility for Property Valuation 71 10.4 Conclusion 72 11 Development Project Valuation: This Chapter Looks at Valuation of Development Projects From an Investment Perspective, Considering Uncertainty, Flexibility, and Time‐to‐Build 73 11.1 Time‐to‐Build Difference between Development Projects and Existing Assets 74 11.2 Lower Opportunity Cost of Capital for Construction Costs 75 11.3 Illustrative Example 77 11.4 Residual Value of Development Land 78 11.5 Investment Risk in Development Project 79 11.6 Conclusion 80 12 Basic Flexibility in Development Projects: The Most Basic Flexibility in Real Estate Development is the Option to Choose whether and when to Build 83 12.1 Review of Call (and Put) Options 84 12.2 Land as a Call Option on Development 85 12.3 Drivers of Option Value 85 12.4 A Practical Example of a Call (and Put) Option 86 12.5 Flexibility and Scenario Analysis for Development Projects 88 12.6 Conclusion 90 13 Option Dichotomies: We Introduce a Typology of Flexibility in Development Projects 91 13.1 Three Dichotomies for Thinking Generally about Development Options 91 13.2 Defensive versus Offensive Options 92 13.3 Options “On” and “In” Projects 93 13.4 Timing Options versus Product Options 94 13.5 Conclusion 94 14 Product Options in Development: We Discuss Three types of Product Options 95 14.1 Concept of Base Plan 95 14.2 Product Expansion Flexibility 96 14.3 Product Mix Flexibility 98 14.4 Conclusion 98 15 Timing Options in Development: Now we Turn to the Types of Timing Options 99 15.1 Project Start‐Timing Flexibility (The Delay Option) 99 15.2 Project Production Timing Flexibility 100 15.3 Modular Production Timing Flexibility 102 15.4 Phasing Timing Flexibility 103 15.5 Types of Phasing 103 15.6 Recognizing Defensive and Offensive Options in Simulation Results 104 15.7 Conclusion 107 16 Garden City: An Example Multi‐Asset Development Project: We Present the Traditional DCF Valuation Spreadsheet Model for the Example Development Project We use in the Rest of Book 109 16.1 Overview of Multi‐Asset Development Project 110 16.2 Structure of a Realistic Multi‐Asset Spreadsheet Pro Forma 111 16.3 Cash Flows for the Example Pro Forma 113 16.4 Temporal Profile for Base Case 115 16.5 Expected Economics of the Garden City Project 116 16.6 Conclusion 118 17 Effect of Uncertainty without Flexibility in Development Project Evaluation: We Re‐analyze the Garden City Project by Reflecting Uncertainty Without Flexibility 119 17.1 Modeling Uncertainty for the Multi‐Asset Development Project 120 17.2 Generating Random Future Scenarios 122 17.3 Outcomes Reflecting Uncertainty for the Multi‐Asset Development 123 17.4 Effect of Different Probability Inputs Assumptions 127 17.5 Conclusion 129 18 Project Start‐Delay Flexibility: We Model the Value of the Most Basic and Widely Available Development Project Option 131 18.1 Project Start‐Delay Option 132 18.2 Option Exercise Decision Rule 132 18.3 Defining “Profit” in the Decision Model 134 18.4 Value of Start‐Delay Flexibility in the Garden City Project 134 18.5 Conclusion 138 19 Decision Rules and Value Implications: We Further Explore the Option to Delay the Project Start 139 19.1 Simple Myopic Delay Rule 140 19.2 Trigger Values 140 19.3 Value Implications of the Decision Rules 141 19.4 Effect of Trigger Values (Start or Delay Bias) 143 19.5 Review the Meaning of Flexibility Value 145 19.6 Conclusion 146 20 Modular Production Timing Flexibility: We Explore the Timing Option to Pause and Restart the Project Any Time After its Commencement 147 20.1 Modular Production Timing Flexibility 148 20.2 Modeling the Modular Production Option 148 20.3 Value of Modular Production Timing Flexibility 150 20.4 Effect of Trigger Values (Bias toward Pause or Continue) 152 20.5 Effect of Combining Start‐Delay and Modular Production Delay Flexibility 154 20.6 Conclusion 157 21 Product Mix Flexibility: This Chapter Presents the Option to Change Product Mix, and Examines the Effect of Volatility on Option Value 159 21.1 Product Mix Flexibility 160 21.2 Modeling the Product Mix Option 160 21.3 Value of Product Mix Flexibility 161 21.4 Effect of Combining Product Mix Flexibility and Timing Options 165 21.5 Effect of Correlation in the Product Markets on the Value of Product Mix Flexibility 167 21.6 Effect of Volatility on the Value of Flexibility 169 21.7 Conclusion 172 22 Project Phasing Flexibility: We Show How to Model and Evaluate the Delay Flexibility Inherent in Project Phasing 173 22.1 Modeling the Sequential Phase Delay Option 173 22.2 Modifying the Garden City Project Plan 174 22.3 Project Economics 177 22.4 The Delay Decision Model 178 22.5 Exploring the Value of Project Phasing Flexibility 179 22.6 Conclusion 182 23 Optimal Phasing: We Now look at Adding Phases, Delineating Phases, and Distinguishing them from Expansion Options 183 23.1 Effect of Increasing the Number of Phases 184 23.2 Principles for Optimal Phasing 186 23.3 What is the Difference between a Phase and an Expansion Option? 190 23.4 Conclusion 191 24 Overall Summary: We summarize the Main Takeaway Points from this Book 193 Appendix 197 Glossary 213 Acronyms and Symbols 219 Index 221

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Book SynopsisAbout the authors: David Frykman is the CEO and owner of Fred Ventures, a private investment company. Previously, he was the CEO and main shareholder of Gymgrossisten (Nasdaq: GYM) and before that a Senior Vice President at Swedbank Markets Corporate Finance. David has also worked with venture capital at Novare Kapital and Spray Investment. In his different roles as owner, board member and CEO, David has conducted a large number of mergers and acquisitions, fund raisings and divestitures. David holds an MSc in economics and finance from Stockholm School of Economics and the Asian Institute of Management as well as a BSc in psychology from Stockholm University. Jakob Tolleryd is a Swedish serial entrepreneur and investor. He is the founder and investor behind a number of companies in the IT/Internet industry. Among them, Compricer; a price comparison site for services, Easyart; the leading European e-commerce company for art prints and Klikki; one of tTable of ContentsTable of Contents and New Edition Content 1 Introduction 2 Presentation of Model Company 3 When Do You Need to Value a Company? 4 Company Valuation – An Overview 5 Ratio-based Valuation 6 Discounted Cash Flow Valuation 7 Underlying Analysis and Key Value Drivers 8 How to Value Your Company in Practice – An Example 9 Value-based Management 10 Afterword Appendix AInspirational list of key value drivers Appendix BTypical information needed for a valuation Notes Glossary Further Reading

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Book SynopsisIn this up-to-date synthesis of current valuation theory and practice, Enrique Arzac applies the latest academic thinking to mergers, buyouts, and restructuring, and blends it with his own practical approach to valuation developed over years of consulting. Throughout the text, Arzac provides illustrative examples and answers many of the valuation problems commonly encountered in professional practice. The result is a valuable toolkit of valuation procedures and analysis methods.

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Book SynopsisThis book gives an overview of the most common techniques used by analysts and experts to assess and value banks in all phases of a Bank’s life, from licensing to resolution. These include licensing procedures, going concern market valuation techniques, liquidation, and resolution methodologies. The author sheds light on financial institutions’ reporting and financial statements and explains how to interpret the data. Special attention is given to the different valuation approaches for financial institutions ranging from the basic PE and PBV methodologies to the more sophisticated ones such Discount cash flow (DCF), Dividend discount model (DDM), excess return models (EVA), and their variant, the warranted equity value (WEV) method. The authors also illustrate how to build a sum-of-the-parts model (SOTP) and how to treat capital in the process as well as developing a bottom-up approach for the cost of equity. The book provides numerous real-world examples which will hopefully help practitioners build their own MS Excel models. Furthermore, this publication investigates some of the critical aspects of banking M&A and its valuation implications. This book also takes a deep dive into valuation for Banks in gone concern status, describing the basis for three different types of valuation of Banks in resolution: to inform a decision on whether to put a bank into resolution; to inform the choice of resolution tools and the extent of any bail-in of liabilities; and to determine whether any creditors would have been better off had the bank gone into insolvency. Special attention is given to the valuation of non-performing loans (NPLs) and financial assets focusing on some operational aspects of winding-down a bank’s loan and trading book portfolio.Table of ContentsChapter 1. Introduction.- Chapter 2. Main Features of the Banking Business Model.- Chapter 3. Valuing a Bank in Going Concern.- Chapter 4. Banks M&a: Strategy and Valuation.- Chapter 5. Valuation in Resolution.- Chapter 6. Valuation in Liquidation.- Chapter 7. Loan Valuation.- Chapter 8. Financial Assets Valuation.- Chapter 9. Solvent Wind Down.

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Book SynopsisDetermine a company''s value, what drives it, and how to enhance value during a M&A Valuation for M&A lays out the steps for measuring and managing value creation in non-publicly traded entities, and helps investors, executives, and their advisors determine the optimum strategy to enhance both market value and strategic value and maximize return on investment. As a starting point in planning for a transaction, it is helpful to compute fair market value, which represents a floor value for the seller since it by definition represents a value agreed upon by any hypothetical willing and able buyer and seller. But for M&A, it is more important to compute investment value, which is the value of the target company to a strategic buyer (and which can vary with each prospective buyer). Prepare for the sale and acquisition of a firm Identify, quantify, and qualify the synergies that increase value to strategic buyers Get access to newTable of ContentsPreface xi Dedication and Acknowledgments xv PART I Introduction 1 Chapter 1 Winning through Mergers and Acquisitions 3 Critical Values Shareholders Overlook 5 Stand-Alone Fair Market Value 6 Investment Value to Strategic Buyers 8 Win–Win Benefits of Merger and Acquisition 10 Computation of Cavendish’s Stand-Alone, Fair Market Value 11 Investment Value to Strategic Buyer 12 PART II Building Value 15 Chapter 2 Building Value and Measuring Return on Investment in a Private Company 17 Public Company Value Creation Model 17 Computing Private Company Value Creation and ROI 19 Analyzing Value Creation Strategies 35 Chapter 3 Market and Competitive Analysis 41 Linking Strategic Planning to Building Value 43 Assessing Specific Company Risk 48 Competitive Factors Frequently Encountered in Nonpublic Entities 53 Financial Analysis 54 Conclusion 59 Chapter 4 Merger and Acquisition Market and Planning Process 61 Common Seller and Buyer Motivations 64 Why Mergers and Acquisitions Fail 65 Sales Strategy and Process 67 Acquisition Strategy and Process 78 Due Diligence Preparation 86 Chapter 5 Measuring Synergies 91 Synergy Measurement Process 92 Key Variables in Assessing Synergies 95 Synergy and Advance Planning 96 PART III Measuring Value 99 Chapter 6 Valuation Approaches and Fundamentals 101 Business Valuation Approaches 101 Using the Invested Capital Model to Define the Investment Being Appraised 103 Why Net Cash Flow Measures Value Most Accurately 104 Frequent Need to Negotiate from Earnings Measures 106 Financial Statement Adjustments 109 Managing Investment Risk in Merger and Acquisition 112 Conclusion 117 Chapter 7 Income Approach: Using Expected Future Returns to Establish Value 119 Why Values for Merger and Acquisition Should Be Driven by the Income Approach 119 Two Methods within the Income Approach 121 Three-Stage DCF Model 128 Establishing Defendable Long-Term Growth Rates and Terminal Values 131 DCF Challenges and Applications 133 Chapter 8 Cost of Capital Essentials 135 Cost of Debt Capital 136 Cost of Preferred Stock 138 Cost of Common Stock 138 Fundamentals and Limitations of the Capital Asset Pricing Model 139 Modified Capital Asset Pricing Model 142 Build-Up Model 143 Summary of Rate of Return Data 151 Private Cost of Capital 153 International Cost of Capital 156 How to Develop an Equity Cost for a Target Company 157 Reconciling Discount Rates and P/E Multiples 159 Conclusion 161 Appendix 8A Using Specific Company Risk Strategically 162 Chapter 9 Weighted Average Cost of Capital 169 Iterative Weighted Average Cost of Capital Process 170 Shortcut Weighted Average Cost of Capital Formula 174 Common Errors in Computing Cost of Capital 176 Chapter 10 Market Approach: Using Guideline Public Companies and M&A Transactions 181 Transaction Multiple Method 182 Guideline Public Company Method 186 Selection of Valuation Multiples 190 Commonly Used Market Multiples 191 Chapter 11 Asset Approach 199 Book Value versus Market Value 200 Premises of Value 201 Use of the Asset Approach to Value Noncontrolling Interests 201 Adjusted Book Value Method 202 Specific Steps in Computing Adjusted Book Value 207 Chapter 12 Adjusting Value through Premiums and Discounts 209 Applicability of Premiums and Discounts 210 Application and Derivation of Premiums and Discounts 211 Apply Discretion in the Size of the Adjustment 213 Control versus Lack of Control in Income-Driven Methods 215 Fair Market Value versus Investment Value 215 Chapter 13 Reconciling Initial Value Estimates and Determining Value Conclusion 217 Essential Need for Broad Perspective 217 Income Approach Review 220 Market Approach Review 225 Asset Approach Review 226 Value Reconciliation and Conclusion 228 Checks to Value 231 Candidly Assess Valuation Capabilities 232 Valuation Scenarios – Platform for M&A 232 Appendix 13A Disciplined and Thorough Valuation Analysis Key to Avoiding Failed M&A Deals 235 Analysis of a Hypothetical Synergistic Deal 235 Establishing the Value of an Acquisition Target 236 Establishing Value for the Acquirer 238 Considerations of Other Impacts on Value 239 PART IV Specialty Issues 241 Chapter 14 Exit Planning 243 Why Is Exit Planning So Difficult? 244 What Makes Planning for Your Private Company Investment Unique? 247 Why Should Exit Planning for Your Private Company Begin Now? 249 Exit Planning Process 250 Step 1: Setting Exit Goals 252 Step 2: Owner Readiness 254 Step 3: Type of Exiting Owner 256 Step 4: Exit Options 258 Step 5: Range of Values 263 Step 6: Execution of Exit Plan 265 Chapter 15 Art of the Deal 269 Unique Negotiation Challenges 269 Deal Structure: Stock versus Assets 271 Asset Transaction 276 Terms of Sale: Cash versus Stock 279 Personal Goodwill 282 Bridging the Gap 283 See the Deal from the Other Side 286 Chapter 16 Fairness Opinions 289 Why Are Fairness Opinions Obtained? 291 The Use of Fairness Opinions by Private Companies 294 Parties Who Prepare Fairness Opinions 295 Components of a Fairness Opinion 297 What Fairness Opinions Are Not 301 Conclusion 302 Appendix 16A Sample Fairness Opinion Letter 303 Chapter 17 M&A and Financial Reporting 309 U.S. GAAP and IFRS 310 Relevant FASB and IFRS Statements 311 Reviews by the Audit Firm 312 ASC 820: Fair Value Measurements 313 ASC 805: Business Combinations 315 ASC 350: Goodwill and Other Intangible Assets 325 Incorporating ASC 805 into the Due Diligence Process 326 References 329 Chapter 18 Intangible Asset Valuation 331 Approaches to Valuing Intangible Assets 332 Key Components to Intangible Asset Valuation 334 Intangible Asset Valuation Methods 343 Conclusion 352 Chapter 19 Measuring and Managing Value in High-Tech Start-Ups 353 Why Appraisals of High-Tech Start-Ups Are Essential 353 Key Differences in High-Tech Start-Ups 355 Value Management Begins with Competitive Analysis 356 Stages of Development 358 Risk and Discount Rates 360 Start-Ups and Traditional Valuation Methods 361 QED Survey of Valuation Methods Used by Venture Capitalists 367 A Probability-Weighted Scenario Method to Value Start-Ups 372 Equity Allocation Methods 377 Conclusion 380 Chapter 20 Cross-Border M&A 381 Strategic Buy-Side Considerations 381 Due Diligence 390 Sell-Side Considerations 395 PART V Case Studies 397 Chapter 21 Merger and Acquisition Valuation Case Study – Distribution Company 399 History and Competitive Conditions 400 Potential Buyers 401 General Economic Conditions 402 Specific Industry Conditions 403 Growth 404 Computation of the Stand-Alone Fair Market Value 404 Risk and Value Drivers 409 Summary and Conclusion of Stand-Alone Fair Market Value 418 Computation of Investment Value 420 Suggested Considerations to Case Conclusion 427 Chapter 22 Merger and Acquisition Valuation Case Study –Professional Services Firm 429 Characteristics 429 Valuation Methods 433 Case Study Introduction 435 Potential Buyer 435 Historic Financial Performance 436 Future Expectations 439 Risk and Value Drivers 443 Discounted Cash Flow Method 445 Other Valuation Methods to Consider 445 Suggested Considerations to Case Conclusion 451 About the Authors 453 Glossary 455 Index 465

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Book Synopsis

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Book SynopsisTable of ContentsAcknowledgments ix About the Author xi About the Contributors xiii Preface xvii Introduction xix Part One Early Stage Valuation in Context Chapter 1 Early Stage Enterprises and the Venture Capital Market 3 Chapter 2 Fair Value Standard 33 Chapter 3 Capital Structure 57Alexander Davie and Antonella Puca Part Two Enterprise Valuation Chapter 4 Seed Stage Valuation and the Venture Capital Method 83Andreas Dal Santo and Antonella Puca Chapter 5 The Backsolve Method 111Neil Beaton and Antonella Puca Chapter 6 Discounted Cash Flow Method 141John Jackman and Antonella Puca Chapter 7 Asset Accumulation Method 177Antonella Puca and Mark Zyla Chapter 8 Non-GAAP Metrics in ESE Valuation 209 Part Three Valuation of Financial Instruments Chapter 9 Allocation of Enterprise Value 237 Chapter 10 Valuation of Options and Warrants 259 Chapter 11 Valuation of Debt Securities 277 Chapter 12 Valuation of Contingent Consideration 309 References 333 Index 343

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Book SynopsisWhat happens to risk as the economic horizon goes to zero and risk is seen as an exposure to a change in state that may occur instantaneously at any time? All activities that have been undertaken statically at a fixed finite horizon can now be reconsidered dynamically at a zero time horizon, with arrival rates at the core of the modeling. This book, aimed at practitioners and researchers in financial risk, delivers the theoretical framework and various applications of the newly established dynamic conic finance theory. The result is a nonlinear non-Gaussian valuation framework for risk management in finance. Risk-free assets disappear and low risk portfolios must pay for their risk reduction with negative expected returns. Hedges may be constructed to enhance value by exploiting risk interactions. Dynamic trading mechanisms are synthesized by machine learning algorithms. Optimal exposures are designed for option positioning simultaneously across all strikes and maturities.Table of Contents1. Introduction; 2. Univariate risk representation using arrival rates; 3. Estimation of univariate arrival rates from time series data; 4. Estimation of univariate arrival rates from option surface data; 5. Multivariate arrival rates associated with prespecified univariate arrival rates; 6. The measure-distorted valuation as a financial objective; 7. Representing market realities; 8. Measure-distorted value-maximizing hedges in practice; 9. Conic hedging contributions and comparisons; 10. Designing optimal univariate exposures; 11. Multivariate static hedge designs using measure-distorted valuations; 12. Static portfolio allocation theory for measure-distorted valuations; 13. Dynamic valuation via nonlinear martingales and associated backward stochastic partial integro-differential equations; 14. Dynamic portfolio theory; 15. Enterprise valuation using infinite and finite horizon valuation of terminal liquidation; 16. Economic acceptability; 17. Trading Markovian models; 18. Market implied measure-distortion parameters; References; Index.

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Book SynopsisRisk consideration is central to more accurate post-crisis valuation Corporate Valuation presents the most up-to-date tools and techniques for more accurate valuation in a highly volatile, globalized, and risky business environment.Table of ContentsPreface xi Acknowledgments xiii About the Author xv Chapter 1 Introduction 1 1.1 What We Should Know to Value a Company 1 1.2 Valuation Methods: An Overview 2 1.3 The Time Value of Money 4 1.4 Uncertainty in Company Valuations 5 1.5 Uncertainty and Managerial Flexibility 9 1.6 Relationship between Value and Uncertainty 15 Chapter 2 Business Forecasting for Valuation 18 2.1 Introduction 18 2.2 Key Phases of the Business Plan Elaboration 18 2.3 What Drives the Preparation of a Business Plan? 27 2.4 The Main Methodological Issues 49 Chapter 3 Scenario Analysis 54 3.1 Introduction 54 3.2 What Is Scenario Analysis? 56 3.3 Difference between Scenario and Sensitivity Analysis 56 3.4 When to Perform Scenario Analysis 57 3.5 Worst and Best Cases and What Happens Next 58 3.6 Multi-Scenario Analysis 59 3.7 Pros and Cons 61 3.8 How to Perform Scenario Analysis in Excel 62 3.9 Conclusions 71 Chapter 4 Monte Carlo Valuation 72 4.1 Introducing Monte Carlo Techniques 72 4.2 Monte Carlo and Corporate Valuation 74 4.3 A Step-by-Step Procedure 76 4.4 Case Study: Outdoor Inc. Valuation 80 4.5 A Step-by-Step Guide Using Excel and Crystal Ball 100 Chapter 5 Determining Cash Flows for Company Valuation 125 5.1 Introduction 125 5.2 Reorganization of the Balance Sheet 126 5.3 Relationship between a Company's Balance Sheet and Income Statement 134 5.4 From the Economic to the Financial Standpoint 137 5.5 Cash Flow Definitions and Valuation Models 141 5.6 Business Plan and Cash Flow Projections 142 Chapter 6 Choosing the Valuation Standpoint 151 6.1 Debt and Value 151 6.2 First Problem: The Relationship between Leverage and Value 152 6.3 Second Problem: Alternative Valuation Techniques When Debt Benefits from a Fiscal Advantage 162 6.4 Third Problem: The Choice between an Asset-Side versus an Equity-Side Perspective 165 6.5 From the Asset Value to the Equity Value 167 Chapter 7 Leverage and Value in Growth Scenarios 168 7.1 Growth, Leverage, and Value 168 7.2 Nominal and Real Discounting 169 7.3 Problems with the Discount of Tax Benefit 172 7.4 Cost of Capital Formulas in Growth Scenarios 173 7.5 The WACC: Some Remarks 178 7.6 Real Dimension of Tax Benefits 180 Appendix 7.1: Derivation of the Formulas to Calculate the Cost of Capital 183 Appendix 7.2: Pattern of K* el in a Growth Context: Some Remarks 190 Chapter 8 Estimating the Cost of Capital 194 8.1 Defining the Opportunity Cost of Capital 194 8.2 A Few Comments on Risk 194 8.3 Practical Approaches to Estimate Keu 197 8.4 Approach Based on Historical Returns 197 8.5 Analysis of Stock Returns 198 8.6 Analysis of Accounting Returns 201 8.7 Estimating Expected Returns from Current Stock Prices 201 8.8 Models Based on Returns' Sensitivity to Risk Factors 204 8.9 The Capital Asset Pricing Model 205 8.10 Calculating Rf 206 8.11 Calculating Rp 208 8.12 Estimating β 212 8.13 Dealing with Specific Risks 218 8.14 Conclusions on the Estimation of the Opportunity Cost of Capital 221 8.15 Cost of Debt 222 8.16 Cost of Different Types of Debt 224 Appendix 8.1: CAPM with Personal Taxes 227 Chapter 9 Cash Flow Profiles and Valuation Procedures 229 9.1 From Business Models to Cash Flow Models 229 9.2 Cash Flow Profiles of Business Units versus Whole Entity 230 9.3 Examples of Cash Flow Profiles 231 9.4 Problems with the Identification of Cash Flow Models 236 9.5 Cash Flow Models in the Case of Restructuring 237 9.6 Debt Profile Analysis 237 9.7 Debt Profile beyond the Plan Horizon Forecast 239 9.8 The Valuation of Tax Advantages: Alternatives 239 9.9 Guidelines for Choosing Debt Patterns for Determining Valuations 245 9.10 Synthetic and Analytical Procedures Valuation 246 9.11 The Standard Procedure 247 Chapter 10 A Steady State Cash Flow Model 249 10.1 Value as a Function of Discounted Future Results 249 10.2 Capitalization of a Normalized Monetary Flow 250 10.3 The Perpetual Growth Formula 264 10.4 Formulas for Limited and Variable (Multi-Stage) Growth 275 10.5 Conclusions 279 Chapter 11 Discounting Cash Flows and Terminal Value 280 11.1 Explicit Projections 280 11.2 Estimation of the Terminal Value 281 11.3 Evaluation of Gas Supply Co. 283 Chapter 12 Multiples: An Overview 295 12.1 Preliminary Remarks 295 12.2 Theory of Multiples: Basic Elements 299 12.3 Price/Earnings Ratio (P/E) 303 12.4 The EV/EBIT and EV/EBITDA Multiples 307 12.5 Other Multiples 311 12.6 Multiples and Leverage 312 12.7 Unlevered Multiples 316 12.8 Multiples and Growth 320 12.9 Relationship between Multiples and Growth 325 12.10 PEG Ratio 326 12.11 Value Maps 327 Appendix 12.1: P/E with Growth 330 Chapter 13 Multiples in Practice 332 13.1 A Framework for the Use of Stock Market Multiples 332 13.2 The Significance of Multiples 335 13.3 The Comparability of Multiples 339 13.4 Multiples Choice in Valuation Processes 340 13.5 Estimation of "Exit" Multiples 343 13.6 An Analysis of Deal Multiples 344 13.7 The Comparable Approach: The Case of Wine Co. 349 Appendix 13.1: Capital Increases and the P/E Ratio 358 Chapter 14 The Acquisition Value 361 14.1 Definitions of Value: An Overview 361 14.2 Value Created by an Acquisition 364 14.3 Value-Components Model 367 14.4 Further Considerations in Valuing Acquisitions 372 14.5 Acquisition Value of Plastic Materials Co. 375 14.6 Acquisition Value of Controlling Interests 377 14.7 Other Determinants of Control Premium 382 14.8 Acquisition Value in a Mandatory Tender Offer 384 14.9 Maximum and Minimum Exchange Ratios in Mergers 386 14.10 Exchange Ratio and Third-Party Protection 389 Appendix 14.1: Other Value Definitions 390 Chapter 15 Value and Prices in the Market for Corporate Control 393 15.1 Price Formation in the Market for Control 393 15.2 Benefits Arising from Acquisitions 396 15.3 From the Pricing Model to the Fair Market Value 399 15.4 Fair Market Value Estimated Adjusting Stand-Alone Cash Flows 401 15.5 Premiums and Discounts in Valuation 408 15.6 The Most Common Premiums and Discounts 410 15.7 Value Levels and Value Expressed by Stock Prices 415 15.8 Estimating Control Premiums 417 15.9 Estimating Acquisition Premiums 420 15.10 Acquisition and Control Premiums in a Perfect World 422 15.11 Estimating the Value of Controlling Stakes: An Example 426 15.12 Minority Discount 427 15.13 Discount for the Lack of Marketability 429 15.14 Definitions of Value and Estimation Procedures 431 Chapter 16 Valuation Considerations on Rights Issues 432 16.1 Introduction to Rights Issues 432 16.2 Setting the Subscription Price 433 16.3 Value of Preemptive Rights 437 16.4 Conclusions 446 Chapter 17 Carbon Risk and Corporate Value 448 17.1 Why Carbon Risk Matters 448 17.2 From Carbon Risks to Carbon Pricing 450 17.3 Incorporating Carbon Risks in Corporate Valuation 453 17.4 Carbon Beta 466 Index 471

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Book SynopsisEnsure that you''re using the most up-to-date data available: Buy the2017 Valuation Handbook U.S. Guide to Cost of Capital + Quarterly PDF Updates together!The New Industry Standard in Business Valuation Reference Materials2017 Valuation Handbook U.S. Guide to Cost of Capital provides the key annual valuation data previously published in (i) the now discontinued Morningstar/IbbotsonSBBI Valuation Yearbook (discontinued in 2013), and (ii) the Duff & PhelpsRisk Premium Report Study (no longer published as a stand-alone publication).The size premia data previously published in theSBBI Valuation Yearbook is referred to as the CRSP Deciles Size Premia exhibits in the new2017 Valuation Handbook U.S. Guide to Cost of Capital, while the size and risk premia data published in the Duff & PhelpsRisk Premium ReportStudy has been publTable of ContentsAcknowledgements xiv Introduction xv Chapter 1 Cost of Capital Defined 1-1 Introduction 1-1 Income Approach Overview 1-2 Discounting versus Capitalizing Concepts 1-2 Valuation Date 1-5 Basic Cost of Capital Concepts 1-5 Sources of Capital 1-9 Cost of Capital Input Assumptions 1-10 Capital Structure Considerations 1-16 Calculating WACC 1-18 Estimates of Cost of Capital are Imprecise 1-19 Key Things to Remember about Cost of Capital 1-21 Chapter 2 Methods for Estimating the Cost of Equity Capital 2-1 Basic Framework 2-1 Types of Risk 2-6 Cost of Equity Capital Estimation Methods 2-8 Build-up 2-10 CAPM 2-11 Other Cost of Equity Capital Estimation Methods 2-15 Key Things to Remember about the Methods for Estimating the Cost of Equity Capital 2-17 Chapter 3 Basic Building Blocks of the Cost of Equity Capital– Risk-free Rate and Equity Risk Premium 3-1 The Risk-free Rate and Equity Risk Premium: Interrelated Concepts 3-1 Spot Risk-free Rates versus Normalized Risk-free Rates 3-2 Global Turbulence and Impact on Interest Rates 3-14 Methods of Risk-free Rate Normalization 3-19 Spot Yield or Normalized Yield? 3-23 Concluded Normalized Risk-free Rate 3-25 Equity Risk Premium 3-26 Estimating the Equity Risk Premium 3-27 Duff & Phelps Recommended U.S. ERP 3-38 Economic and Financial Market Indicators 3-39 Quantitative Models 3-44 Concluding on an ERP 3-48 Chapter 4 Basic Building Blocks of the Cost of Equity Capital – Size Premium 4-1 Size as a Predictor of Equity Returns 4-1 Possible Explanations for the Greater Returns of Smaller Companies 4-2 The Size Effect: Empirical Evidence 4-2 The Size Effect Over Longer Periods 4-3 The Size Effect Tends to Stabilize Over Time 4-6 The Size Effect Changes Over Time 4-7 Criticisms of the Size Effect 4-8 Data Issues 4-12 Has the Size Effect Disappeared in More Recent Periods? 4-17 Relationship of Size and Liquidity 4-21 Key Things to Remember about the Size Premium 4-26 Chapter 5 Basic Building Blocks of the Cost of Equity Capital – Betas and Industry Risk Premia 5-1 Beta 5-1 Differences in Estimation of Equity Betas 5-7 Full-Information Beta 5-11 Industry Risk Premia 5-12 Full-Information Beta Methodology 5-16 Debt Betas 5-17 Unlevering and Levering Equity Betas 5-18 Key Things to Remember about Betas and the Industry Risk Premia 5-19 Chapter 6 Basic Building Blocks of the Cost of Equity Capital – Company-specific Risk Premia 6-1 Introduction 6-1 Adjustments for Differences in Risk 6-2 Adjustments for Risk in Net Cash Flows and Biased Projections 6-5 Adjustments for Other Risk Factors 6-7 Matching Fundamental Risk and Return 6-8 Key Things to Remember about Company-specific Risk Premia 6-10 Chapter 7 The CRSP Deciles Size Premia Studies and the Risk Premium Report Studies– A Comparison 7-1 History of the CRSP Deciles Size Premia Studies 7-1 History of the Risk Premium Report Studies 7-2 Data Sources 7-2 Definitions of “Size” 7-6 Time Period Examined 7-7 Number of Portfolios 7-7 Portfolio Overlap 7-7 Guideline Portfolio Method and Regression Equation Method 7-8 Risk Premia Over CAPM (Size Premia) 7-8 “Smoothed” Premia versus “Average” Premia 7-12 OLS Beta versus Sum Beta 7-12 Risk Premia Over the Risk Free Rate 7-12 Unlevered Premia 7-13 Risk Study 7-13 Characteristics of Companies in Portfolios 7-13 Online Applications 7-14 Chapter 8 CRSP Deciles Size Premia Examples 8-1 Build-up Example 8-1 CAPM Example 8-4 Key Things to Remember about the CRSP Deciles Size Premia 8-7 Chapter 9 Risk Premium Report Exhibits – General Information 9-1 Appropriate Use of the Risk Premium Report Exhibits 9-1 How the Risk Premium Report Exhibits are Organized 9-2 Cost of Equity Capital Estimation Methods Available 9-3 Proper Application of the Equity Risk Premium (ERP) Adjustment 9-4 “Smoothed” Premia versus “Average” Premia 9-7 The “Guideline Portfolio Method” versus the “Regression Equation Method” 9-8 Example: Calculating an Interpolated Premium Using the Regression Equation Method 9-9 Tips Regarding the Regression Equation Method 9-10 Can the Regression Equation Method be Used If the Subject Company Is Small? 9-10 Size Study or Risk Study? 9-11 Key Things to Remember About the Risk Premium Report Exhibits 9-12 Chapter 10 Risk Premium Report Exhibits – Examples 10-1 Size Study 10-1 Reasons for Using Additional Measures of Size 10-1 The Difference Between the Size Study’s A Exhibits and the B Exhibits 10-2 The Difference Between “Risk Premia Over the Risk-free Rate” and “Risk Premia Over CAPM” 10-2 Calculating Custom Interpolated Premia for Smaller Companies 10-6 Overview of Methods Used to Estimate Cost of Equity Capital Using the Size Study 10-9 Size Study Examples: Assumptions Used 10-10 Size Study Examples 10-12 Unlevered Cost of Equity Capital 10-17 Overview of the Methodology and Assumptions Used to Unlever Risk Premia 10-18 Estimating Cost of Equity Capital Using the “Build-up 1-Unlevered” Method 10-22 Estimating Cost of Equity Capital Using the Capital Asset Pricing Model (CAPM) 10-26 Estimating Cost of Equity Capital Using the “Build-up 2” Method 10-30 Risk Study 10-35 Overview of Methods Used to Estimate Cost of Equity Capital Using the Risk Study 10-42 Risk Study Examples 10-45 Build-up 3-Unlevered 10-49 High-Financial-Risk Study 10-51 Overview of Methods Used to Estimate Cost of Equity Capital Using the High-Financial-Risk Study 10-57 Estimating Cost of Equity Capital Using the “Build-up 1-High-Financial-Risk” Method 10-58 Estimating Cost of Equity Capital Using the “CAPM-High-Financial-Risk” Method 10-61 Comparative Risk Study 10-63 Using the Comparative Risk Study to Refine Build-up Method Estimates 10-67 Using the Comparative Risk Study to Refine CAPM Estimates 10-69 Chapter 11 Real Estate 11-1 Individual Real Estate Assets 11-1 Real Estate Investment Trusts (REITs) 11-2 Structure of Real Estate Entities 11-3 Correlation of U.S. REITs Compared to Other U.S. Asset Classes 11-4 Summary Statistics of U.S. REITs Compared to Other U.S. Asset Classes 11-6 Real Estate Property Valuation Inputs 11-8 Key Things to Remember about Real Property Valuation 11-17 Chapter 12 Answers to Commonly Asked Questions 12-1 Glossary Index Appendix 1 – Definitions of Standard & Poor’s Compustat Data Items Used to Calculate the Risk Premium Report Exhibits Appendix 2 – Changes to the Risk Premium Report Over Time Appendix 3 – CRSP Deciles Size Premia Study: Key Variables Appendix 3a – Industry Risk Premium (RPi) Appendix 3b – Debt Betas Appendix 4 – Risk Premium Report Study Exhibits

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Book SynopsisA complete explanation of the issues that determine private firm value Principles of Private Firm Valuation combines recent academic research and practical real-world experience to help readers better understand the multitude of factors that determine private firm value.Table of ContentsPreface. CHAPTER 1: The Value of Fair Market Value. CHAPTER 2: Creating and Measuring the Value of Private Firms. CHAPTER 3: The Restructuring of Frier Manufacturing. CHAPTER 4: Valuation Models and Metrics: Discounted Free Cash Flow and the Method of Multiples. CHAPTER 5: Estimating the Cost of Capital. CHAPTER 6: The Value of Liquidity: Estimating the Size of the Liquidity Discount. CHAPTER 7: Estimating the Value of Control. CHAPTER 8: Taxes and Firm Value. CHAPTER 9: Valuation and Financial Reports: The Case of Measuring Goodwill Impairment. Notes. Index.

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Book SynopsisThe value of a corporation is the discounted present value of future cash flows provided by the company to the shareholders. The valuation process requires that the corporate financial decision maker determine the future free cash flow to equity, the short-term growth rate, the long-term growth rate, and the required rate of return based on market beta. The book discusses the Black-Scholes option pricing model and the weighted average cost of capital. The objective of this book is to provide a template for demonstrating corporate financial management using a real company - Coca-Cola. The data used in this book comes from the financial statements of Coca-Cola available on EDGAR. Other data are from SBBI, Yahoo! Finance, the U. S. Bureau of Economic Analysis, Stocks, Bonds, Bills, and Inflation, Market Results for 1926 -2010, 2011 Yearbook, Classic Edition, Morningstar, and US Department of the Treasury.

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Book SynopsisThis book is about championing a move away from simply evaluating physical assets to understanding and evaluating the intangible value of an entity. It means moving beyond economic theory to reprioritise and change the organisation so that further value can be created via processes, systems, measures, skills, knowledge and strategy. It is also about mapping the intangible value chain. The book looks at value networks and, using real-life projects asks questions such as: What do company value networks look like How are they used to create value How can one value' the value chain What lessons can be learnt from companies with high value networks as opposed to companies with low value networks What is the impact on finance disciplines, processes, measures, systems and skills. These answers to these questions as provided by the case studies and interviews with CFOs from the companies involved will help to improve focus, impTable of Contents1. Today’s Challenges, Tomorrow’s AspirationToday’s Aspirations. Riding the two-headed monster. Getting “back in the saddle”. Coping with governance and reporting. Creating value and growth. Shaping the new agenda. Straight from the CFO. 2. Reshaping Finance. Centralization: where to draw the line? The quest for standardization. The new fi nancial management model. Process optimization and reporting. Streamlining corporate structure. Lessons from private equity. Straight from the CFO. 3. Making Change Happen. Change, in a hurry. Champions of change. Transforming the public sector. Pulling all change levers. From CFO to COO. Talent for the future. Straight from the CFO. 4. Releasing Intangible Value. Execution not valuation. The goodwill dilemma. Value centers. Managing intellectual property. Selecting valuation techniques. Brands: the missing half of the balance sheet! Treating customers as assets. Value tiering. Moving from back offi ce to the front. Structural and human capital. Straight from the CFO. 5. Driving Growth and Innovation. Sustainable advantage. Decision support takes center stage. New ways of working. In-market innovation. From the outside, in. Innovation centers: a “win–win”. Straight from the CFO. 6. Looking Forward, Not Backward. Expect the unexpected. Closing the strategy gap in pharmaceuticals. Optimizing value through integration. Rolling forecasts. Monitoring reality. Connecting the dots through systems. Straight from the CFO. 7. Innovative Business Partnering. Finance of the future. Working in partnership. Effective investment in brands. Decision making under uncertainty. Finance and innovation. Dynamic performance management. The finance academy. Conclusion. Straight from the CFO. 8. Promoting Global Connectivity. Building global partnerships. Integrating shared services by region. Creating a worldwide center. Seamless support: near-shore or off-shore? Connectivity through technology. Straight from the CFO. 9. Leveraging Risk and Regulation. The misery of regulation. Leveraging Sarbanes-Oxley. Multiple listings, multiple standards. Implementation overload. The case for dual accounting. Enterprise-wide risk management. The role of Chief Risk Offi cer (CRO). Straight from the CFO. 10. Becoming a Sustainable Corporation. Case for corporate responsibility. Investor perspective. Ethics and value creation. A multi-stakeholder approach. Best practices: corporate reporting. Triple bottom line. Reality check. Becoming the good corporation! Straight from the CFO. Index.

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Book SynopsisThis title takes a practical, step-by-step approach to valuing both public and closely-held companies in emerging economies for merger or acquisition purposes. It bridges the gap between theory and the practice of company valuation in transitioning markets. Focuses on the valuation issues for emerging markets.Table of ContentsFOREWORD xvii CHAPTER 1 Valuing Companies in Emerging Markets: Importance and Challenges 1 CHAPTER 2 Valuing Companies in Developed Markets: A Review 32 CHAPTER 3 Fundamental Discounted Cashflow Valuation in Emerging Markets: Cashflows and the Cost-of-Equity Capital 92 CHAPTER 4 Fundamental Discounted Cashflow Valuation in Emerging Markets: Unsystematic Risk and Synthetic Company Value 175 CHAPTER 5 Valuing Companies in Emerging Markets via Real Options 222 CHAPTER 6 Relative Valuation in Emerging Markets: Comparable Companies and Transactions 247 CHAPTER 7 Valuing Technology Startups in Emerging Markets 319 APPENDIX A Valuation Parameters in the Reference Emerging Markets 429 APPENDIX B Valuation Parameters in the United States 438 APPENDIX C Valuation Parameters in Argentina 449 APPENDIX D Sources of Data on Comparable Companies and Transactions 462 APPENDIX E Valuation Parameters of U.S. Internet Companies 464 APPENDIX F Present Value of Asset/Present Value of Exercise Price 483 APPENDIX G Best Valuation Practices in the United States and Argentina 488 INDEX 497

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Book SynopsisTable of ContentsForeword vii Preface ix Acknowledgments xv Chapter 1 What is My Business Worth? 1 Chapter 2 Valuation Basics 3 Chapter 3 Why is Valuing Small Businesses Different from Valuing Larger Businesses? 29 Chapter 4 Assessing the Subject Company 37 Chapter 5 Normalization of Cash Flows 81 Chapter 6 Market Approaches 107 Chapter 7 Asset Approaches 145 Chapter 8 Income Approaches 157 Chapter 9 Valuing Partial Interests in a Business 221 Chapter 10 Goodwill and the Small Business 255 Chapter 11 Accounting Issues with Small and Very Small Businesses 265 Chapter 12 Details for Business Valuators 301 Chapter 13 Assisting the Small Business Buyer or Seller 317 Chapter 14 How to Review a Business Valuation 369 Chapter 15 Final Thought 397 About the Website 399 Index 401

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Book SynopsisVery few of the decision makers involved in a venture backed company have a definitive understanding of how valuation techniques are being applied to their financial statements and their decision making process. This casebook provides a quick and accurate road map on how valuation techniques used for tax, financial reporting and deal structure impact a company''s past, present and future. The book includes real world case studies to simplify this complex subject for the practitioners serving companies, the founders and executives running the companies, and the investors that fund the companies.Table of ContentsAcknowledgments ix Introduction What You Don’t Know About Valuation Will Cost You Money 1 Chapter 1 Using Facebook, Twitter, and LinkedIn to Explain VC Valuation Gains and Losses: How VCs, Angels, Founders, and Employees Give Up Investment Cash Flow Every Day 13 Did Valuation Ignorance Cost ConnectU (and the Winklevosses) $50MM? 14 An Expert Doesn’t Need a 409A Valuation When He or She Has a Certificate and Basic Math 15 Valuing Facebook’s Common Stock Compared to Preferred Stock in Minutes 16 What the Winklevosses Would Have Seen in Any 409A Valuation Report 19 Deriving a Discount for Lack of Marketability for Valuations 27 Facebook at $80 Billion Valuation versus Enron at $80 Billion Valuation 35 Deal Terms, Waterfalls, and the Pre-Money Myth 36 The Pre-Money Myth 44 Summary 56 Chapter 2 Should Venture-Backed Companies Even Consider a DCF Model?: Introducing the Life Science Valuation Case: Zogenix 57 Zogenix: Company Background Summary and Highlights 58 Leaping Forward Just 20 Months, the Company Files for an IPO 64 Order of Valuations Presented in This Case 67 Chapter 3 Valuation Methods versus Allocation Methods Regarding Zogenix 69 Separating Enterprise Value from the Allocation of That Value 69 Valuing Total Equity 72 Using Future Value (FV) and Present Value (PV) to Value Future Cash Flows Today 79 Summary 82 Chapter 4 Applying the Typical DCF Model to a Venture-Backed Company Hardly Ever Works 85 The Gordon Growth Model 85 High Growth Limits the Gordon Growth Model 87 Dividend Irrelevance and Capital Structure Irrelevance 90 Using Comparables (Generally Market Multiples) to Generate a Terminal Value 91 Actual Differences between Angels and VCs versus Perceived Differences 100 Applying Valuation Methods and Allocation Methods at Inception 102 Summary 104 Chapter 5 “Enterprise Value” + “Allocation Methods” = Value Destruction: Undervaluing Companies and Overvaluing Employee Options 107 Most 409A Valuations Undervalue the Company and Simultaneously Overvalue Employee Stock Options 107 Did Auditors Drive Valuators to Overvalue Employee Stock Options? 109 Most 409A Enterprise Value Calculations Ignore the “Takeover” Value of Preferred 113 The Realistic Range of Possibilities Depends on Who the Investors Are 119 Overstating Returns and Understating Returns on the Same Asset (Simultaneously) 125 What Happens to Fund IRRs When You Assume Book Value Equals Market Value? 128 The Real Cost of Fair Value, Fair Market Value, and Enterprise Value 132 Yahoo! Case 137 Chapter 6 Why You Should D.O.W.T. (Doubt) Venture Capital Returns—Option Pool Reserve 159 Unissued Option Pools 159 Value Conclusion Elements Impacted by Option Pool Reserve Assumptions 161 Impact on Parties Relying on Assumptions of VC Investments 176 Chapter 7 If Valuation Can’t Make You Money, Do You Really Need It?: Learning Practical Applications from Kayak.com 183 Applying Studies to Real-World Cases 186 Important Questions to Ask 213 Summary 223 Chapter 8 Don’t Hate the Appraiser (Blame the Auditor Instead) 225 Interview with Jeff Faust, AVA 226 Summary 236 Chapter 9 Don’t Blame the Auditors (Blame the Practice Aid Instead): 409A Valuation Professionals Discussing Topic 820 (FAS 157) with VC CFOs 237 Introduction to the Expert Panelists 238 The Auditor’s Valuation “Bible” 239 SAS101 Tests, PWERMS, and OPMs 240 PWERMS and rNPV/eNPV Models 243 Subjectivity and the PWERM (or “Power”) Method 243 Finding Inputs for the OPM Model 245 Enterprise Values versus Allocations 246 Next Round Pricing and Topic 820 248 Different Ways of Treating Granted, Unvested, and Reserved Options 250 Valuing Warrants in Venture-Backed Companies 252 Quantifying Qualitative Inputs to Value Conclusions for VC-Funded Companies 253 Discounts for Lack of Marketability (DLOM) and Venture-Fund Portfolios 254 Sharespost, SecondMarket as Market Inputs 258 Summary 262 Chapter 10 Now That You Understand Venture Capital Valuation, Share It 263 About the Author 269 Index 271

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Book SynopsisA guide that demystifies modern valuation theory and shows how to apply fundamental valuation concepts The revised and updated third edition of Business Valuation: An Integrated Theory explores the core concepts of the integrated theory of business valuation and adapts the theory to reflect how the market for private business actually works. In this third edition of their book, the authorstwo experts on the topic of business valuationhelp readers translate valuation theory into everyday valuation practice. This important updated book: Includes an extended review of the core concepts of the integrated theory of business valuation and applies the theory on a total capital basisExplains typical valuation discounts (marketability and minority interest) and premiums (control premiums) in the context of financial theory, institutional reality and the behavior of market participantsExplores evolving valuation perspectives in the context of the integrated theoryWritten by two experts on valuation theory from Mercer Capital The third edition of Business Valuation is the only book available regarding an integrated theory of business valuationoffering an essential, unprecedented resource for business professionals.Table of ContentsIntroduction xiii What’s New in the Third Edition? xiv Who Should Read This Book? xvii Part One Conceptual Overview of the Integrated Theory Chapter 1 The World of Value 3 Introduction 3 Common Questions 3 The World of Value 4 The Organizing Principles 5 Summary 16 Chapter 2 The Integrated Theory (Equity Basis) 19 Introduction 19 Common Questions 20 The Fundamental Valuation Model 21 The Conceptual Levels of Value 23 Symbolic Notation for the Integrated Theory 27 The Marketable Minority Interest Level of Value 29 Introduction to the Control Levels of Value 35 Strategic Control Level of Value 51 Firmwide Levels versus the Shareholder Level of Value 58 The Nonmarketable Minority Level of Value 60 The Integrated Theory of Business Valuation on an Equity Basis 67 Summary 67 Chapter 3 The Integrated Theory (Enterprise Basis) 71 Introduction 71 Comparing the Levels of Value: Equity and Enterprise Bases 73 Final Comparisons of the Equity and Enterprise Bases 77 Summary 79 Part Two Valuing Enterprise Cash Flows Chapter 4 Income Approach (Cash Flows) 83 Introduction 83 Reconciling Single-Period Capitalization and Discounted Cash Flow Methods 84 Defining Enterprise Cash Flows 90 Defining Equity Cash Flows 95 Reinvestment Rates and Interim Growth Rates 99 Terminal Growth Rates 104 Expected Cash Flows and the Integrated Theory 108 Marketable Minority Interest Level: Public Company Equivalent 115 Financial Control Level: Private Equity Cash Flows 124 Strategic Control Level: Strategic Acquirer Cash Flows 128 Assessing the Reasonableness of Projected Enterprise Cash Flows 136 Conclusion 139 Chapter 5 Income Approach (Discount Rate) 141 Introduction 141 Return Basics: Realized versus Required Returns 142 Components of the Weighted Average Cost of Capital 148 Market Participants and the WACC 165 The Levels of Value and the WACC 169 Assessing Overall Reasonableness 175 Chapter 6 Market Approach (Guideline Public Companies) 177 Introduction 177 Relationship of the Income and Market Approaches 178 What Do Observed Public Company Valuation Multiples Mean? 180 Adjusting Valuation Multiples for Differences in Risk and Growth 199 Guideline Public Company Multiples and the Enterprise Levels of Value 214 Assessing Overall Reasonableness 219 Chapter 7 Market Approach (Guideline Transactions) 221 Introduction 221 Attributes of Guideline Transaction Data 222 Drawing Valuation Inferences from Guideline Transaction Data 225 Minority Interest Discounts Inferred from Observed Control Premiums 240 Guideline Transaction Multiples and the Levels of Value 242 Assessing Overall Reasonableness 244 Appendix 7-A: A Historical Perspective on the Control Premium and Minority Interest Discount 247 Part Three Valuing Shareholder Cash Flows Chapter 8 Restricted Stock Discounts and Pre-IPO Studies 271 Introduction 271 An Overview of Restricted Stock Discounts 275 Review of the FMV/Stout Restricted Stock Database 306 Pre-IPO Discounts 317 Conclusion 325 Chapter 9 Introduction to the QMDM (Quantitative Marketability Discount Model) 327 Introduction 327 Potential Valuation Approaches at the Shareholder Level 328 A Shareholder Level Discounted Cash Flow Model in Outline 331 Economic Factors Giving Rise to the Marketability Discount 338 Conclusion 346 Appendix 9-A: Liquidity and Marketability 349 Chapter 10 The QMDM Assumptions in Detail 359 Introduction 359 Assumption 1: Expected Holding Period for the Investment (HP) 360 Assumption 2A: Expected Dividend Yield (D %) 368 Assumption 2B: Expected Growth of Dividends (GD) 377 Assumption 2C: Timing of Dividend Receipt 378 Assumption 3A: The Expected Growth Rate in Value (GV) 379 Assumption 3B: Adjustments to the Terminal Value 385 Assumption 4: Required Holding Period Return (Rhp) 385 Conclusion 399 Chapter 11 Applying the QMDM 401 Introduction 401 Comprehensive Example of the QMDM in Use 401 Condensed QMDM Examples 414 The Uniform Standards of Professional Appraisal Practice and the QMDM 427 Chapter 12 Applying the Integrated Theory to Tax Pass-Through Entities 435 Introduction 435 The Nature of the S Corporation Benefit 437 The Firmwide Level Value of S Corporations 440 Other Observations Regarding Relative Value at the Firmwide Levels 443 The Shareholder Level Value of S Corporations 446 S Corporations and the Tax Cuts and Jobs Act of 2017 458 Conclusion 467 About the Authors 469 Index 477

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Book SynopsisPlease contact the authors at upstream.petroleum.in.excel@gmail.com for details of how to access the trial version of Crystal Ball, as well as the Excel and other files which are *not* part of the e-book version download.This is a book no deal team should be without. It is a must for those involved in upstream oil and gas transactions, planning, budgeting, investment appraisal and portfolio management. Its stepbystep approach cuts through complexity, making it comprehensive and understandable by a wide range of users with a wide range of abilities. It can be used as a textbook, an introductory primer or as a handbook that you can dip in and out of or read cover to cover.Michael Lynch-Bell, Senior Advisor, Oil & Gas, Ernst & Young LLP; ex-officio Chairman, UN Expert Group on Resource Classification In the upstream petroleum industry, it is the value of posttax cashflows which matters most

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Book SynopsisAswath Damodaran is simply the best valuation teacher around. If you are interested in the theory or practice of valuation, you should have Damodaran on Valuation on your bookshelf. You can bet that I do. -- Michael J. Mauboussin, Chief Investment Strategist, Legg Mason Capital Management and author of More Than You Know: Finding Financial Wisdom in Unconventional Places In order to be a successful CEO, corporate strategist, or analyst, understanding the valuation process is a necessity. The second edition of Damodaran on Valuation stands out as the most reliable book for answering many of today?s critical valuation questions. Completely revised and updated, this edition is the ideal book on valuation for CEOs and corporate strategists. You''ll gain an understanding of the vitality of today?s valuation models and develop the acumen needed for the most complex and subtle valuation scenarios you will face.Table of ContentsPreface. Chapter 1: Introduction to Valuation. Introduction to Chapters 2-6: Discounted Cashflow Valuation. Chapter 2: Estimating Discount Rates. Chapter 3: Measuring Cash Flows. Chapter 4: Forecasting Cash Flows. Chapter 5: Equity Discounted Cash Flow Models. Chapter 6: Firm Valuation Models. Introduction to Chapters 7-9: Relative Valuation. Chapter 7: Relative Valuation: First Principles. Chapter 8: Equity Multiples. Chapter 9: Value Multiples. Introduction to Chapters 10-17: Loose Ends in Valuation. Chapter 10: Cash, Cross Holdings and Other Assets. Chapter 11: Employee Equity Options and Compensation. Chapter 12: The Value of Intangibles. Chapter 13: The Value of Control. Chapter 14: The Value of Liquidity. Chapter 15: The Value of Synergy. Chapter 16: The Value of Transparency. Chapter 17: The Cost of Distress. Chapter 18: Closing Thoughts. Index.

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Book SynopsisA complete guide to technology risk management, valuation, and pricing, providing readers with backgrounds in the core concepts, sources of value, methods of valuation, equity realizations, and negotiation strategies. Based on the author's real-world experiences, the second edition has been greatly revised and expanded.Table of ContentsPreface vii Disclaimer viii About the Author ix Acknowledgments xi Chapter 1 Introduction to Opportunity Discovery, Valuation, and Dealmaking 1 Introduction: Technology D-V-D 1 Taxonomy of Technology Licensing 5 High Significance, High Ambiguity Contexts 7 Licensing D-V-D and Innovation 12 Going Forward 23 Notes 23 Chapter 2 Risk and Reward 27 Uncertainty 27 Phronesis (Judgment) 31 Technology Uncertainty 32 More on Risk 35 Value and Price 45 Two Final Points on Buying and Selling 48 Notes 49 Approach I Opportunity Discovery 51 Chapter 3 Identifying and Prioritizing Technology Opportunities 53 Seller “Opportunity Space” 53 The Technology Box 63 Buy-Side Expressions of Value: The Wheelbarrow 69 Overview of Valuation Methods 71 The Six Valuation Methods 77 Conclusion 81 Notes 82 Approach II Valuation 85 Chapter 4 Method 1: Use of Industry Standards for Valuation 87 The Concept and Limitations of “Industry Standards” 87 Sources of Industry Standard Data and Information 97 Survey Results as a Source of Industry Standards Data and Information 98 Proposed or Established Norms 105 Shopped Term Sheets and Price Lists 107 News Sources of License Agreement Information 109 Journals, Proprietary Databases, Reports, and Consultants 118 Published License Agreements as a Source of Industry Standards 119 Court Cases/Judgments as a Source of Industry Standards 123 Patent Pools 126 Lifetime and Organizational Learning 127 Average Error 127 Concluding Observations and Cautionary Notes 129 Appendix 4A: Outline of Agreement between DuPont and University of Houston 131 Notes 134 Chapter 5 Method 2: The Rating/Ranking Method, and Tool 139 Ubiquity of Rating/Ranking 141 Overview of How Rating/Ranking Can Be Used in Valuation 145 Groups and Grouping as a Fundamental Knowledge Forming Process 148 Using Rating/Ranking to Value Technology: Factor Assessment 155 Developing Criteria for Using Rating/Ranking for Valuation of Technologies 162 Illustrations of Applying the Rating/Ranking Method 168 Issues in Interpreting Value from a Rating/Ranking Result 171 Using Rating/Ranking to Value Technology: Classified Value 174 Uses of Rating/Ranking with Approaches and as a General Tool 176 Perspectives on Rating/Ranking as an Approach with Licensing 182 Knowledge, Uncertainty, and Humility 185 Conclusion 189 Appendix 5A: Factors in Pricing License 190 Notes 196 Chapter 6 Method 3: Rules of Thumb to Determine Valuation 201 Foundations of Rules of Thumb 203 Cost Savings Example of the 25 Percent Rule 205 Perspectives on the 25 Percent Rule 208 Use of the 25 Percent Rule for Apportioning New Profits 209 Examples of Applying the 25 Percent Rule to New Profits Licensing 211 A Universal Rule of Thumb Chart 222 Other Percent Rule Values 224 Some Misuses/Misapplications of the 25 Percent Rule 225 Other Valuation Rules of Thumb Used (or Have Been Proposed) 226 Summary Points on the Use of the 25 Percent Rule 229 Conclusion 231 Notes 232 Chapter 7 Method 4: Discounted Cash Flow Method to Determine Valuation 235 Overview of the DCF Method 236 Basic Financial Concepts 247 Quantification, Classification of Risk 265 An Example Cash Flow Projection from a License 277 Additional Considerations for Calculating DCF 289 Segment and Scenario Analysis 293 Cash Flow Projections 299 Other Issues to Be Considered with the DCF Method 318 Conclusion 330 Sources of Information to Develop Business Projections 331 Notes 331 Chapter 8 Method 5: Advanced Valuation Methods 337 Modified Discounted Cash Flow Method 338 Monte Carlo Method 345 Real Option Methods 414 Conclusion 447 Online Resources 448 Appendix 8A: Example Crystal Ball Report for Exhibit 8.18 449 Appendix 8B: Crystal Ball Report Corresponding to the Results Presented in Exhibit 8.XX for a Double-Humped Cost Distribution Assumption 456 Notes 464 Chapter 9 Method 6: Valuation by Auctions 469 Introduction to Auctions 470 When Auctions are Feasible 471 Auction Examples 474 Auctions as Distinct from Other Types of Dealmaking 479 Auction Strategies for Buyers 489 Auction Caution 490 Conclusion 491 Appendix 9A: Bidder’s Agreement 491 Notes 492 Approach III Dealmaking 495 Chapter 10 Approach: Deal Structure 497 Return to the Box and Wheelbarrow 498 Cash When Pricing Structures 502 Cash As Pricing Structures 507 Cash If Pricing Structures 517 Cash Maybe: Options 521 Consideration Forms Beyond Simple Cash 522 Special Form of Cash If: Equity 525 Balancing Simplicity with Comprehensiveness 537 Conclusion 537 Notes 538 Chapter 11 People, Process, and Lessons Learned 541 Introduction 541 Deal Team 546 Deal Targets 552 Negotiating Plan 556 Plan B 560 Concluding Advice from Technology Dealmakers 565 Notes 566 Chapter 12 In Conclusion 569 Approach of Opportunity Discovery as a Quest 569 Approach of Valuation: A Review of the Six Valuation Methods 572 Approach of Dealmaking 583 Closing Thoughts 592 Website Resources 594 Notes 594 Appendix: List of Abbreviations and Trademarks 597 Bibliography 599 Index 603

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Book SynopsisChapter 1. Introduction: Presenting conceptual and practical approaches to Emerging Market valuation.- Chapter 2. The Emerging Markets Investment Landscape: Past, Present and Future.- Chapter 3. Key Drivers of Valuation and Returns in Emerging Markets: An Advisor´s View.- Chapter 4. Understanding the unique characteristics of valuation in Emerging Markets.- Chapter 5. Valuation Methods and Techniques: Fundamental principles of valuation theory in emerging markets.- Chapter 6. Public Company Valuation in Emerging Markets: A simplified and practical step-by-step approach via DCF.- Chapter 7. Emerging Market Valuation Multiples: “It’s all relative”.- Chapter 8. High Stakes, Higher Rates: An overview and step-by-step approach to calculating the Cost of Capital in Emerging Market firms.- Chapter 9. Estimating privately-held capital asset values in emerging markets using certainty-equivalent risk pricing.- Chapter 10.

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Book SynopsisBusiness Valuation Discounts and Premiums SECOND EDITION Discounts and premiums do not just affect the value of a company; they play a crucial role in influencing a host of other factors and conditions that can make or break a deal. When it comes to business valuations, it''s the business appraiser''s responsibility to be intimately knowledgeable with every aspect of discounts and premiums: the different types, the situations when they may or may not apply, and how to quantify them. In this newly updated edition of Business Valuation: Discounts and Premiums, Shannon Pratt?one of the nation''s most recognized and respected business valuation consultants?brings together the latest collective wisdom and knowledge about all major business discounts and premiums. Addressing the three basic approaches to conducting a valuation?the income approach, the market approach, and the asset approach?Shannon Pratt deftly and logically details the different discountsTable of ContentsList of Exhibits xv About the Author xix About the Contributing Authors xxi Foreword xxv Preface xxvii Acknowledgments xxix 1 Overview of Business Valuation Discounts and Premiums and the Bases to Which They Are Applied 1 Discounts and Premiums Are Big-Money Issues 2 ‘‘Entity Level’’ versus ‘‘Shareholder Level’’ Discounts and Premiums 3 How the Valuation Approaches Used Affect the Level of Value 8 Use of Public Company Data to Quantify Discounts and Premiums 9 How the Standard of Value Affects Discounts and Premiums 10 American Society of Appraisers Business Valuation Standard VII:Valuation Discounts and Premiums 12 Summary 13 2 Minority Discounts and Control Premiums 15 Relevant Definitions 16 Basic Minority/Control Value Relationship 16 Prerogatives of Control 17 Factors Affecting Degree of Control 18 How the Valuation Methodology Affects the Minority Discount or Control Premium 25 Do Publicly Traded Minority Stock Prices Reflect Control Value? 29 Treatment of Control Premiums in the Delaware Courts 35 How the Purpose of the Valuation Affects Minority Discounts or Control Premiums 37 Summary 38 3 Empirical Data Regarding Minority Discounts and Control Premiums 41 Premiums Paid in Acquisitions 41 Identifying Industries with Higher or Lower Control Premiums 62 Caveats Regarding Use of Control Premium Data 63 Are Control Premiums Too High? 65 Percentage Discounts from Net Asset Value 66 Summary 66 4 Minority Discounts and Control Premiums in the Courts 68 Gift, Estate, and Income Tax Cases 70 Discounts for Lack of Control in Employee Stock Ownership Plan Cases 74 Dissenting Shareholder Cases 75 Shareholder Oppression Cases 80 Marital Dissolution Cases 80 Bankruptcy Case 82 Summary 82 5 Discounts for Lack of Marketability for Minority Interests: Concept and Evidence 86 Public Market Benchmark for Marketability 86 Empirical Evidence to Quantify Discounts for Lack of Marketability 87 Restricted Stock Studies 88 Pre–Initial Public Offering Discount for Lack of Marketability Studies 90 Courts’ Aversion to ‘‘Benchmarking’’ 91 Regulatory and Court Recognition of Empirical Marketability Discount Studies 92 Summary 92 6 Synopsis of Restricted Stock Studies 95 Securities and Exchange Commission Institutional Investor Study 96 Gelman Study 100 Trout Study 100 Moroney Study 101 Maher Study 101 Standard Research Consultants Study 101 Silber Study 101 FMV Opinions Study 103 Management Planning Study 104 Johnson Study 110 Columbia Financial Advisors Study 110 LiquiStat Database 111 Summary 111 7 LiquiStat Database (Restricted Stocks, Options, Warrants, and Convertible Securities) 113 Restricted Stock as a Basis 114 Biases Beyond Illiquidity in Traditional Restricted Stock Studies 114 How LiquiStat Is Different 115 Options and Warrants in LiquiStat 116 Convertible Securities in LiquiStat 117 Summary 117 8 Blockage Discounts 118 Blockage Is Distinct from Restricted Stock 119 Factors to Analyze in Quantifying Blockage Discounts 119 Must Consider Ways of Selling Stock 122 ‘‘Price Pressure’’ and ‘‘Market Exposure’’ 122 Block Buyer Could Ameliorate Blockage Discount 122 Blockage Discounts Recognized in Estate and Gift Tax Regulations 123 Blockage Discounts in U.S. Tax Court 123 Financial Accounting Standards That May Affect Blockage Discounts 126 Blockage Discounts Used to Estimate Illiquidity Discounts 126 Summary 126 9 John Emory Pre–Initial Public Offering Discount for Lack of Marketability Studies—Complete Underlying Data 128 Study #1: Adjusted Study, January 1980–June 1981 129 Study #2: Adjusted Study, January 1985–June 1986 129 Study #3: Adjusted Study, August 1987–January 1989 130 Study #4: Adjusted Study, February 1989–July 1990 130 Study #5: Adjusted Study, August 1990–January 1992 130 Study #6: Adjusted Study, February 1992–July 1993 130 Study #7: Adjusted Study, January 1994–June 1995 131 Study #8: Adjusted Study, November 1995–April 1997 131 Study #9: Adjusted Study, Dot-Com Companies, May 1997–March 2000 131 Study #10: Adjusted Expanded Study, May 1997–December 2000 133 Summary 133 10 Valuation Advisors Discount for Lack of Marketability Study 182 Description of Study 182 Results of Study 184 Summary 185 11 Factors Affecting Discounts for Lack of Marketability for Minority Interests 186 Size of Distributions 187 Prospects for Liquidity 191 Pool of Potential Buyers 193 Risk Factors 194 Summary 198 12 Discounts for Lack of Marketability for Controlling Interests 200 Discounts for Lack of Marketability for Controlling Interests: A Controversial Concept 202 ‘‘Control, Marketable’’ Is an Oxymoron 202 Bases from Which Controlling Interest Discounts for Lack of Marketability May Be Deducted 202 Factors Affecting Controlling Interest Discounts for Lack of Marketability 204 Public versus Private Company Acquisition Multiples 207 Court Treatment of Controlling Interest Discounts for Lack of Marketability 210 Summary 211 13 The Quantitative Marketability Discount Model: A Shareholder Level DCF Model 213 Introduction 213 The Structure of the Shareholder Level DCF Model 214 AVisual Representation of the Shareholder Level DCF Model 217 Factors Contributing to Marketability Discounts 218 Summary 223 14 Marketability Discounts in the Courts—Minority Interests 225 Gift and Estate Tax Cases 227 Employee Stock Ownership Plan Case 231 Dissenting Shareholder Cases 232 Minority Oppression Cases 234 Marital Dissolution Cases 234 Summary 238 15 Marketability Discounts in the Courts—Controlling Interests 241 Gift and Estate Tax Cases 241 Marital Dissolution Cases 243 Summary 244 16 Voting versus Nonvoting Stock 245 Voting versus Nonvoting Stock Scenarios 245 Empirical Studies Show Little Differential for Small Minority Interests 246 Transactions Involving Premiums for Control Blocks 251 Court Cases Involving Voting versus Nonvoting Stock 251 Summary 258 17 Key Person Discounts and Premiums 260 Empirical Evidence Supports Key Person Discount 261 Internal Revenue Service Recognizes Key Person Discount 263 Factors to Consider in Analyzing the Key Person Discount 264 Quantifying the Magnitude of the Key Person Discount 265 U.S. Tax Court Cases Involving Key Person Discounts 266 Key Person Discounts in Marital Dissolutions 270 Key Person Discounts in Other Types of Cases 272 Summary 274 18 Discounts for Trapped-In Capital Gains Taxes 276 Rationale for Trapped-In Capital Gains Tax Discount 277 ‘‘General Utilities Doctrine’’ 277 Tax Court Recognizes Trapped-In Capital Gains 278 Internal Revenue Service Acquiesces to Trapped-In Capital Gains Discount 279 Subsequent Tax Cases Regularly Recognize Trapped-In Capital Gains Tax Discount 280 Trapped-In Capital Gains in Dissenting Stockholder Actions 282 Trapped-In Capital Gains in Bankruptcy Court 283 Trapped-In Capital Gains Taxes in Marital Dissolutions 283 Treatment of Capital Gains Tax Liability 286 Treatment of Capital Gains Tax Liability in S Corporations 288 Summary 288 19 Nonhomogeneous Assets (‘‘Portfolio’’) Discounts 291 Portfolio Discount Principle 291 Empirical Evidence Supporting Portfolio Discounts 292 How to Value Companies with Disparate Portfolios 294 Quantifying the Portfolio Discount 295 Portfolio Discounts in the Courts 295 Summary 298 20 Discounts for Environmental, Litigation, and Other Contingent Liabilities 300 Concept of the Contingent Liability Discount 300 Financial Accounting Standard #5 May Provide Guidance in Quantifying Contingent Liabilities 301 Treatment of Contingencies in the U.S. Tax Court 301 Treatment of Contingencies in Marital Dissolution 304 Summary 304 21 Discount Adjustments for Limited Partnership Interests and Other Asset Management Entities 305 Introduction 307 Partnership Features 307 Other State Law and Regulatory Issues 308 Compliance with Federal Income Tax Regulations 308 Compliance with Federal Transfer Tax Regulations 309 Analysis of Ownership and Classes of Interests 309 Analysis of Underlying Adjusted Net Asset Value 310 Analysis of Income Capacity Value 310 Valuation of Noncontrolling Entity Interests 311 Discounts for Lack of Control and Marketability 313 Court Cases Regarding Limited Partnership Values 315 Summary 321 22 Adjusting Values for Differences in Size 323 Income Approach 323 Market Approach 325 Criticisms of the Size Premium 329 Court Cases Involving the Size Premium 329 Summary 334 Sources of Additional Data 334 23 Discounts and Premiums in ESOP Valuations 337 ESOP Definition, Types, and Benefits 337 ‘‘Adequate Consideration’’ for ESOP Valuation Purposes 338 Control Premiums in ESOP Valuations 339 Discounts for Lack of Marketability in ESOP Valuations 339 ESOP Court Cases 340 Summary 344 24 Discounts and Premiums in Divorce Disputes 345 Control Premiums in Divorce 345 Discounts for Lack of Marketability in Divorce 345 Discounts for Lack of Voting Rights in Divorce 346 Key Person Discounts in Divorce 346 The Effective Discount for Personal Goodwill in Divorce 346 Active versus Passive Appreciation 347 Summary 347 25 Discounts and Premiums in Corporate and Partnership Dissolution and Oppression Cases 349 Dissolution for Shareholder (Partner) Oppression 349 Discounts 351 California Oppression Cases 357 Delaware’s Approach 359 Summary 360 26 Discounts and Premiums in Fair Value for Financial Reporting 362 Introduction 362 Fair Value of Reporting Units 363 Fair Value of Share-Based Compensation 369 Summary 371 Additional Reading 371 27 Premium and Discount Issues in Undivided Interest Valuations 372 Description and Characteristics of Undivided Interests 373 Appraisal of Assets in Fee-Simple Interest 376 Factors Affecting the Value of an Undivided Interest 379 Valuation Adjustments for Undivided Interests 381 Court Decisions Related to Undivided Interest Discounts 389 Summary 395 28 Common Errors in Applying Discounts and Premiums 397 Using Synergistic Acquisition Premiums to Quantify Premiums for Control 398 Assuming That the Discounted Cash Flow Valuation Method Always Produces a Minority Value 398 Assuming That the Guideline Public Company Method Always Produces a Minority Value 398 Valuing Underlying Assets Rather Than Stock or Partnership Interests 399 Using Minority Interest Marketability Discount Data to Quantify Marketability Discounts for Controlling Interests 399 Using Only Restricted Stock Studies (and Not Pre–Initial Public Offering Studies) as Benchmark for Discounts for Lack of Marketability 399 Inadequate Analysis of Relevant Factors 400 Indiscriminate Use of Average Discounts or Premiums 400 Applying (or Omitting) a Premium or Discount Inappropriately for the Legal Context 400 Applying Discounts or Premiums to the Entire Capital Structure Rather than Only to Equity 401 Quantifying Discounts or Premiums Based on Past Court Cases 401 Using an Asset Appraiser to Quantify Discounts or Premiums for Stock or Partnership Interests 401 Summary 401 Appendix A Bibliography 403 Books 403 Articles 404 Periodicals 407 Appendix B Data Resources 410 Control Premiums/Minority Discounts 410 Discounts for Lack of Marketability 410 Discounts from Net Asset Value for Limited Partnership Interests 412 Discounts from Net Asset Value for REITs and REOCs 413 Discounts from Net Asset Value for Closed-End Investment Funds 413 Discount and Capitalization Rates 414 Appendix C How Much Can Marketability Affect Security Values? 416 I. The Framework 417 II. The Upper Bound 418 III. A Comparison 420 IV. Conclusion 422 References 422 Appendix D Internal Revenue Service Revenue Ruling 77-287 424 Section 1. Purpose 424 Sec. 2. Nature of the Problem 424 Sec. 3. Background and Definitions 424 Sec. 4. Securities Industry Practice in Valuing Restricted Securities 425 Sec. 5. Facts and Circumstances Material to Valuation of Restricted Securities 427 Sec. 6. Weighing Facts and Circumstances Material to Restricted Stock Valuation 428 Sec. 7. Effect on Other Documents 429 Appendix E Securities and Exchange Commission Rules 144 and 144A 430 History 442 Appendix F Table of Cases 448 Index 455

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Book SynopsisThe twelfth edition of this essential valuation textbook reflects the changes in the regulatory and statutory framework for property valuations that have occurred since 2013, as well as presenting the tried and tested principles and practices of real estate valuation.The twelfth edition is up to date as of June 2018 with the latest regulations, statutes and case law, including the RICS Valuation â Global Standards 2017. Its comprehensive coverage of the legal, economic and technical aspects of valuation make this book a core text for most university and college real estate programmes, and it provides students and practitioners with current and relevant guidance on the preparation of valuations for statutory purposes.Throughout the text, the author team of experienced valuers presents examples of the application of these principles to the everyday problems met in practice. This new edition continues to be of excellent value to both students and practitioners alike as itTable of ContentsPreface to the twelfth editionAcknowledgements Table of casesTable of statutesTable of statutary instruments1. Principles of valuation 2. Valuation approaches and methods 3. Property law4. Planning law5. The market approach6. Market rent7. Outgoings8. Property yields 9. Investment mathematics as it applies to property valuation 10. Income approach or investment method 11. Discounted cash flow12. The cost approach and residual method 13. Developments in valuation approaches14. Development properties15. Residential properties 16. Commercial properties (1): types of property 17. Commercial properties (2): Landlord and Tenant Acts and rent reviews18. UK valuation applications 19. Valuations for rating 20. Taxation21. Principles of the law of compulsory purchase and compensation 22. Compulsory purchase compensation (1): compensation for land taken23. Compulsory purchase compensation (2): compensation for severance and injurious affection 24. Compulsory purchase compensation (3): compensation disturbance25. Blight notices26. Purchase notices 27. Compensation under the Town and Country Planning Acts: revocation, modification and discontinuance orders, etc. Index

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Book SynopsisThis seventh edition of Business Analysis and Valuation: An International Perspective guides students through the interpretation and use of IFRS-based financial statements with the help of case studies from a wide range of international corporations. The authors use real-life financial and non-financial data to show how financial analysis informs valuation decisions. Numerous and varied tasks cement a fundamental and practical understanding of corporate analysis in students..

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Book SynopsisA practical guide to the best approaches for commercial real estate value assessment Commercial Property Valuation provides a comprehensive examination of principles and methods of determining the accurate value of commercial assets. This invaluable resource covers all key elements of commercial property valuation, including valuation queries, real estate report structure, market analysis, capitalization and discount rates estimation, and more. This book details the economic characteristics unique to commercial property and illustrates property-specific risk factors and mitigation strategies. Drawing from years of professional and academic experience, the authors provide accurate information on multiple valuation approaches suitable for commercial real estate such as sales comparison, income capitalization and residual land value. Favoring real-world practicality over complex formulas, this book provides a powerful set of tools to assist readers in selectTable of ContentsAbout the Authors xi Foreword by Andrew Baum xiii Foreword by Vincent Vinit xv Preface xvii Chapter 1 Introduction to Property Valuation 1 Determining the Valuation Requirement 1 The Subject of the Valuation 1 Purpose of the Valuation 2 Value to Be Estimated 2 Valuation Date 2 Definitions of Value 3 Market Value 3 Investment Value 5 Valuation Associations, Codes and Standards 6 Notes 7 Chapter 2 Economic Characteristics and Elements of Risks of Properties 9 Characteristics of Property Investments 10 Building and Land 10 Use of Space and Investment Asset 13 Owners and Users 13 Business Perspective 14 Location 15 Categories of Property Investments 16 Development Projects 16 Income-Producing Properties 17 Trading Operations 17 Skills in Asset and Investment Management 18 Economic Classification of Properties 19 Property Classification Criteria 19 Macro Categories of Properties 24 A Simple Definition of Risk 28 Common Risk Elements in Real Estate Investment 29 Capital Market 29 Liquidity 30 Financial Structure 30 Regulatory 31 Location 31 Intended Use and Type of Properties 32 Development Projects 33 Authorisation 33 Environmental 33 Construction-Related 34 Market 34 Income-Producing Properties 35 Physical and Technical Features 35 Management and Market 36 Rental and Contractual Situation 36 Notes 37 Chapter 3 Market Analysis 41 Economic Analysis 41 Analysis of the Property Market 41 Comparative Data and Valuation Method 43 Characteristics of the Comparative Factors and Information Sources 43 Notes 45 Chapter 4 A New Simple Classification of Valuation Methods 47 Choice of Valuation Method 49 Depreciated Cost Approach Methods 53 Introduction 53 Description 53 Use, Advantages, and Limitations of the Depreciated Cost Approach 56 Notes 56 Chapter 5 Sales Comparison Approach Methods 59 Approach and Application Criteria 59 Direct Comparison Approach 60 Hedonic Pricing Model 63 Notes 65 Chapter 6 Income Capitalisation Comparison Approach Methods 67 Approach and Application Criteria 67 Direct Capitalisation Approach 69 The Direct Capitalisation Approach Calculation Algorithm 70 Profit and Loss Account of an Income-Producing Property 71 Use, Advantages, and Limitations of the Direct Capitalisation Approach 78 Application of the Direct Capitalisation Approach 78 Discounted Cash Flow Approach 81 Choosing the Time Horizon 82 Estimating the Cash Flows 83 Estimating the Terminal Value 83 Discounting the Cash Flows and Calculating the Asset Value 85 Use, Advantages, and Limitations of the Discounted Cash Flow Approach 88 Residual Value Methods 90 Introduction 90 Single Period Residual Value Approach 90 Multiple Periods Residual Value Approach 91 Notes 94 Chapter 7 Property Return Rates 97 Measuring the Return on a Property Investment 97 Rates and Capital Market 101 Cap Rate 103 Definition and Description of the Cap Rate 103 Going-In and Going-Out Cap Rate 104 Discount Rate 107 Definition and Description of the Discount Rate 107 Consistency Between Discount Rate and Cash Flow 108 The Components of the Discount Rate 110 How to Estimate Property Return Rates 113 Market Extraction 114 Determining the Discount Rate from the Cap Rate 117 Build-Up Approach 119 Analysing the Opinions of Market Players on the Return Expected 122 Notes 122 Chapter 8 Structure of the Valuation Report 127 Executive Summary 128 Preamble 128 Description of the Property 128 Market Analysis 133 Valuation 134 Conclusions 134 Appendices 135 Notes 135 Chapter 9 Office Property Appraisal 137 Description of the Property 137 Choice of Valuation Method 139 Market Analysis 139 Valuation 140 Choosing the Time Horizon 140 Estimating the Cash Flows 141 Determining the Terminal Value 145 Determining the Discount Rate 146 Calculating the Market Value of the Property 147 Notes 151 Chapter 10 High Street Retail Unit Appraisal 153 Description of the Property 153 Choice of Valuation Method 154 Market Analysis 157 Estimating the ERV 157 Estimating the Cap Rate 160 Estimating Vacancy and Leasing Time 161 Estimating Refurbishment Costs 161 Valuation 161 Notes 163 Chapter 11 Hotel Appraisal 165 Description of the Property 165 Choice of Valuation Method 167 Market Analysis 168 Macroeconomic Climate 168 Supply and Demand Analysis 169 Forecast of Average Rate and Occupancy 173 Projection of Income and Expenses 178 Valuation 185 Notes 187 Chapter 12 Development Project Appraisal 189 Description of the Property 189 Choice of Valuation Method 190 Market Analysis 191 Valuation of the Development Project 192 Choosing the Time Horizon 192 Estimating the Cash Flows 194 Determining the Discount Rate 195 Calculating the Market Value of the Development Project 197 Notes 197 Glossary 199 Bibliography 205 Index 209

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Book SynopsisThis new edition of the all in one' textbook for the postgraduate study of valuation on real estate courses retains its focus on the valuation and appraisal of commercial and industrial property across investment, development and occupier markets.Table of ContentsPreface xiii Acknowledgements xv PART A PROPERTY VALUE AND PROPERTY VALUATION 1 1 Microeconomic Concepts 3 1.1 Supply and demand, markets and equilibrium price determination 3 1.2 The property market and price determination 6 1.2.1 Rent for land 6 1.2.2 Land use rents 8 1.2.3 Land use intensity 12 1.3 Location and land use 14 1.4 The economics of property development 22 1.4.1 Type and density of property development 22 1.4.2 The timing of redevelopment 25 Notes 28 References 29 2 Macroeconomic Considerations 31 2.1 The commercial property market 31 2.2 Property occupation 33 2.3 Property investment 34 2.4 Property development 43 2.5 Property and the wider economy 44 References 48 3 What is Property Valuation 49 3.1 Introduction 49 3.2 The need for valuations 50 3.2.1 Types of property to be valued 52 3.2.2 Bases of value 57 3.3 Determinants of value 60 3.3.1 Property-specific factors 60 3.3.2 Market-related factors 66 3.4 Valuation procedures 69 3.4.1 Terms of engagement 71 3.4.2 Inspections and investigations 71 3.4.3 Valuation report 73 3.5 Measurement 73 Appendix – Inspection checklist 76 Notes 81 References 81 4 Valuation Mathematics 83 4.1 Introduction 83 4.2 The time value of money 84 4.2.1 Single period investments 85 4.2.2 Multi-period investments 86 4.2.3 Tax 93 4.3 Yields and rates of return 94 4.3.1 Yields 95 4.3.2 Rates of return 96 4.3.3 Yields and rates of return 98 References 99 PART B VALUATION METHODS 101 5 Comparison Method 103 5.1 Introduction 103 5.2 Sources of data 104 5.3 Comparison metrics 106 5.3.1 Relative value of retail ground floor ‘zones’ 107 5.4 Comparison adjustment 110 References 114 6 Investment Method 115 6.1 Introduction 115 6.2 All-risks yield (ARY) methods 117 6.2.1 Valuation of rack-rented freehold property investments 117 6.2.2 Valuation of reversionary freehold property investments 119 6.2.3 Valuation of leasehold property investments 127 6.2.4 Example: ARY Investment method 134 6.3 Discounted cash-flow (DCF) methods 135 6.3.1 A discounted cash-flow valuation model 136 6.3.2 Applying the DCF valuation model 142 Notes 157 References 157 Further reading 158 7 Profits Method 161 7.1 Introduction 161 7.2 Method 162 7.3 Example of a profits method valuation 166 7.4 Summary 169 Notes 170 References 170 8 Replacement Cost Method 171 8.1 Introduction 171 8.2 Method 172 8.3 Application 178 8.3.1 Valuation of an owner-occupied property for accounts purposes 178 8.3.2 Valuation for insurance purposes 178 8.4 Issues 178 8.4.1 Definitional problems 179 8.4.2 Methodological problems 181 8.5 Summary 184 Notes 185 References 186 9 Residual Method 187 9.1 Introduction 187 9.2 Conventional residual land valuation 188 9.3 Problems with the residual method 199 9.4 Cash-flow residual model 202 References 206 10 Automated Valuation Models and Computer-Assisted Mass Appraisal 207 10.1 Introduction 207 10.2 Method 207 10.2.1 Simple linear regression (dependence of one metric variable on another) 208 10.2.2 Multiple linear regression (dependence of one variable on two or more variables) 211 10.3 Example 215 10.3.1 Data 215 10.3.2 Descriptive statistics 216 10.3.3 Simple linear regression 216 10.3.4 Multiple linear regression 220 10.4 Multiple regression analysis: Research and applications 226 10.4.1 Computer-assisted mass appraisal 228 10.4.2 Automated valuation models 229 10.5 Advantages and disadvantages of regression-based valuation 230 Notes 231 References 231 PART C VALUATION APPLICATIONS 233 11 Lease Pricing 235 11.1 Introduction 235 11.2 Lease incentives 236 11.2.1 Rent-free periods 237 11.2.2 Capital contributions 241 11.2.3 Premiums and reverse premiums 242 11.3 Alternative lease arrangements 246 11.3.1 Stepped rents 246 11.3.2 Turnover rents 247 11.3.3 Short leases and leases with break options 249 11.4 Valuations at rent review, lease renewal and lease end 252 11.4.1 Rent reviews 252 11.4.2 Surrender and renewal of leases 253 11.4.3 Compensation for disturbance and improvements 255 11.4.4 Example 1 256 11.4.5 Example 2 259 Notes 262 References 263 12 Valuations for Financial Statements and for Secured Lending Purposes 264 12.1 Valuing property for financial statements 264 12.1.1 Financial reporting standards and valuation bases 265 12.2 Methods of valuing property assets for financial reporting purposes 272 12.2.1 Example valuations 274 12.3 Valuations for lending purposes where the loan is secured against commercial property 279 12.3.1 Example 281 Notes 285 References 286 13 Valuations for Taxation Purposes 287 13.1 Capital gains tax and corporation tax 287 13.1.1 Grant of a long lease out of a freehold or long leasehold interest 294 13.1.2 Grant of a short lease out of a freehold or long leasehold interest 295 13.1.3 Grant of a short lease out of a short leasehold interest 296 13.2 Inheritance tax 297 13.3 Business rates 299 13.3.1 Rental comparison 302 13.3.2 Profits method 303 13.3.3 Contractor’s method 304 Note 306 References 306 14 Valuations for Compulsory Purchase and Compensation 307 14.1 Compensation for land taken (compulsorily acquired) 308 14.2 Compensation for severance and injurious affection 311 14.2.1 Compensation where part of an owner’s land is acquired 311 14.2.2 Compensation where no land is taken 314 14.3 Disturbance compensation 315 14.3.1 Case study 316 14.4 Planning compensation 317 14.4.1 Revocation, modification and discontinuance orders 318 14.4.2 Purchase notices and blight notices 318 14.5 A note on CGT and compensation for compulsory acquisition 319 Notes 320 References 321 15 Specialist Valuations 322 15.1 Operational entities or ‘trade-related’ properties 322 15.1.1 Hotels, guest houses, bed & breakfast and self-catering accommodation 322 15.1.2 Restaurants, public houses and nightclubs 324 15.1.3 Care homes 328 15.1.4 Petrol filling stations 330 15.1.5 Student accommodation 331 15.1.6 Serviced offices 332 15.1.7 Data centres 335 15.2 Valuation of contaminated land 335 15.3 Synergistic value 339 15.3.1 Physical merger 339 15.3.2 Legal merger 339 15.4 Special Purpose Valuations 340 15.4.1 Charitable Valuations 340 15.4.2 Local authority disposals of land for less than best consideration 341 Notes 341 References 342 16 Investment Valuations – Further Considerations 343 16.1 Short leases and leases with break clauses 343 16.2 Over-rented property investments 346 16.3 Valuation accuracy, variance and uncertainty 349 16.3.1 Valuation accuracy 349 16.3.2 Valuation variance 350 16.3.3 Valuation uncertainty 352 16.3.4 Sensitivity analysis 353 16.3.5 Scenario testing and discrete probability modelling 356 16.3.6 Continuous probability modelling and simulation 359 16.3.7 Arbitrage (tenant yield approach) 363 Notes 368 References 369 PART D APPRAISAL 371 17 Investment Appraisal 373 17.1 Introduction 373 17.2 Appraisal information and assumptions 375 17.2.1 Rent and rental growth 375 17.2.2 Target rate of return 377 17.2.3 Holding period 380 17.2.4 Exit value 381 17.3 Appraisal methodology 381 17.3.1 Payback method 381 17.3.2 Yield 382 17.3.3 DCF methods of investment appraisal 383 17.3.4 Example 393 17.4 Risk analysis in property investment appraisal 395 17.5 Financing property investment 398 Notes 401 References 401 18 Development Appraisal 403 18.1 Introduction 403 18.2 Conventional residual profit appraisal 403 18.2.1 Profit as a percentage of cost 405 18.2.2 Development yield 406 18.2.3 Criticisms 406 18.3 Cash-flow profit appraisal 408 18.3.1 Criticisms 412 18.4 Development risk 413 18.4.1 Risk analysis 414 18.4.2 Risk management 427 18.5 Development finance 429 18.5.1 Borrowers of development finance 429 18.5.2 Type of finance 430 18.5.3 Sources of development finance 431 18.5.4 Duration of funding 432 18.5.5 Typical development finance structures 433 18.5.6 Gearing 439 18.5.7 Risk management in property financing 439 18.5.8 Finance accounting 441 18.5.9 Sales revenue 444 Notes 452 References 453 Glossary 454 Index 460

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Book SynopsisIntroduction.- The capital asset pricing model (CAPM) & CAPM 2.0.- The Arbitrage Pricing Theory (APT).- Capital Structure.- Modigliani–Miller Theory.- The Modigliani–Miller theory with arbitrary frequency of payment of tax on profit.- Modification of the Modigliani–Miller theory for the case of advance tax on profit payments.- How Frequently Should Companies Pay Tax on Profit.- Generalization of the Modigliani–Miller Theory for the Case of Variable Profit.- BFO.- Inflation in Brusov–Filatova–Orekhova theory and in its perpetuity limit – Modigliani – Miller theory.- Benefits of Advance Payments of Tax on Profit: Consideration within Brusov–Filatova–Orekhova (BFO) Theory.- The Generalization of the Brusov–Filatova–Orekhova Theory for the Case of Payments of Tax on Profit with Arbitrary Frequency.- Influence of Method and Frequency of Profit Tax Payments on Company Financial Indicators.- Generalization of the Brusov–Filatova–Orekhova Theory for the Case of Variable Income.- BFO Theory with Variable Profit in Case of Advance Payments of Tax on Profit.- BFO Theory with Variable Profit: Two Types of Payments of Tax on Profit: Advanced Payments and at the Ends of Periods.- New meaningful effects in modern capital structure theory.- Cost of equity and dividend policy.- A  "golden age" of the companies.- A  "golden age" of the companies: Conditions of its existence.- Application of the Company's “Golden Age” Effect in the Economic Practice.- Incorporating CAPM into Capital Structure Theories: Accounting for Business and Financial Risks.- A new approach to assessing a company’s financial indicators: taking into account business and financial risks.- Qualitatively New Approach to Business Valuation and Company Value.- Business Valuation and Company Value: New Horizons.- Conclusions.

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a huge range and FREE tracked UK delivery on ALL orders.

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Book SynopsisAn insider''s look at security analysis and business valuation, as practiced by Wall Street, Corporate America, and international businesses Two major market crashes, numerous financial and accounting scandals, growth in private equity and hedge funds, Sarbanes Oxley and related regulations, and international developments changed security analysis and business valuation substantially over the last fourteen years. These events necessitated a second edition of this modern classic, praised earlier by Barron''s as a welcome successor to Graham and Dodd and used in the global CFA exam. This authoritative book shows the rational, rigorous analysis is still the most successful way to evaluate securities. It picks up where Graham and Dodd''s bestselling Security Analysis - for decades considered the definitive word on the subject - leaves off. Providing a practical viewpoint, Security Analysis on Wall Street shows how the values of common stock are Trade ReviewPraise for the First Edition "A cross between a textbook for analysts-in-training and a tell-all expose of the analyst profession." —Business Week "Hooke has written a step-by-step explanation of how to analyze stock. He takes the reader from the basic yardsticks used to judge companies -- intrinsic value, relative value and acquisition value - and goes all the way to analyzing stocks in emerging overseas markets." —ABC News.com Advance Praise for the Second Edition "A welcome successor to Graham and Dodd's Security Analysis." —Barron's Advance Praise for the Second Edition "Jeff Hooke has written an excellent overview of the process of valuing individual equities and entire companies. It is useful for a variety of readers, ranging from active investors, to financial advisors, to principals of companies contemplating a sale or public offering. It has a tremendous amount of material between the covers of a single volume." —William H. Heyman, Vice Chairman and Chief Investment Officer, The Travelers Companies, Inc.; and former director, Division of Market Regulation, U.S. Securities and Exchange Commission "The Second Edition is released at a propitious time. As we recover from the worst financial crisis in recent memory, the need for thorough analysis is critical. Hooke's primer is readable and easily understood, even by those without CFA credentials. It should help practitioners avoid the mistakes of casual decision making." —Dennis Flannery, retired executive vice president, Inter-American Development Bank "This book is more than a textbook for anyone who wants to make a living as a valuation expert or securities analyst —it is a living, breathing, 'how to' guide on the latest methods, with plenty of real-life examples that hit home." —Ron Everett, Managing Partner, Certified Business Appraiser, Business Valuation Center "The financial crises of the past decade highlight the imperative for disciplined valuation. Hooke provides a broad array of concepts and tools to achieve this. He goes beyond a purely formulaic approach to focus on idiosyncratic characteristics in both public and private equity contexts." —Alex Triantis, Chair, Finance Department, Robert H. Smith School of Business, University of Maryland "This book represents an impressive effort to offer comprehensive coverage of business valuation. It combines the deep insight of an insider with the rigor of top academics. Jeff is not shy about giving his opinion, which makes the reading experience unique and exciting." —Ludovic Phalippou, Professor of Finance, University of Amsterdam "This is an invaluable reference for the M&A professional. Hooke provides a view of the forest, in giving the rationale for the methods in use and how they compare with each other. The text is punctuated by his own wry commentary and frequent examples." —Gary Nelson, Chairman, Sigma Federal, former vice chairman of SRA International "This book is a highly useful resource for any existing or soon-to-be professional in the financial analysis field. It is a must-read presentation of the valuation methodologies utilized in the private equity business." —Matt Newton, Partner, Columbia Capital "Hooke's book provides an insightful approach to both financial analysis and business valuation. It should be required reading for anyone involved in the securities industry, from money managers to investment bankers." —George Konomos, Senior Advisor, Latigo Partners “The new edition of Jeffrey Hooke’s (Hooke Associates and FOCUS, LLC) Security Analysis and Business Valuation on Wall Street contains fresh insights and updates on the fundamentals of security analysis and business valuation, new case study examples, and four new chapters. Among other reasons, Hooke points out why experts should read this practitioner-oriented book: "Two market crashes -- and the attendant fallout -- suggest that business appraisers consider the use of higher discount rates, the need for recessions in many forecasts, and the inclusion of political risk in certain US business evaluations…The validity of each methodology -- be it guideline companies or discounted cash flow, to give two examples -- has to be cross checked against its counterparts now more than ever, or the appraiser can get false readings.” — Business Valuation Review, May 5, 2010Table of ContentsPreface xiii What Is Security Analysis? xiv Recent Trends xv Why Study Security Analysis and Business Valuation? xvii Overview of the Contents xviii What’s New in the Second Edition xviii PART ONE The Investing Environment 1 CHAPTER 1 Why Analyze a Security? 3 The Origins of Security Analysis 3 No Profit Guarantee 5 Day-to-Day Trading and Security Analysis 6 Herd Psychology and Security Analysis 6 Momentum Investors 7 Game Theory and Security Analysis 8 The Premise of Security Analysis 9 Scientific Method 10 Security Analysis Techniques 12 Basic Valuation Approaches 12 Other Valuation Approaches 14 Summary 16 CHAPTER 2 Who’s Practicing Security Analysis and Business Valuation? 17 Securities Firms and Their Analysts 18 Major Institutional Investors 20 A Dying Art? 21 Index Funds and Exchange-Traded Funds 24 Small Money Management Firms 25 Rating Agencies 26 Individual Investors: A Special Category 26 Business Valuation 28 Summary 28 CHAPTER 3 Seeking a Level Playing Field 29 Brief History of Securities Regulation 30 The Chief Regulator: The Securities and Exchange Commission 32 Sales and Trading Practices 34 Margin Regulation 37 The Life Cycle of a New Security Issue 37 Summary 49 CHAPTER 4 Other Sources of Information 51 The Business Media 51 The Free Internet 53 The Fee-for-Service Internet 53 Trade Associations, Consulting Firms, Government Publications, and Financial Organizations 54 Credit Rating Agencies 54 Securities Firm Research 55 Newswires 56 Independent Expert Services 56 Summary 57 PART TWO Performing the Analysis and Writing the Research Report 59 CHAPTER 5 Starting the Analysis 61 The Security Analysis Process 62 Model Research Report 63 The Analyst’s Responsibility 64 The Cascade of Projections 66 Selecting Stocks for Study: Top-Down versus Bottom-Up 67 Limited Time and Resources 68 The Margin of Safety 69 Summary 70 CHAPTER 6 Industry Analysis 73 Background 73 Organizing an Industry Analysis 75 Industry Classification 75 External Factors 81 Demand Analysis 86 Supply Analysis in the Industry Study 92 Profitability, Pricing, and the Industry Study 94 International Competition and Markets 95 Summary 98 CHAPTER 7 Company-Specific Analysis 99 Systematic Approach of a Business Analysis 101 Overview and Business Description 106 Products and Markets Section 106 Production and Distribution 110 Competition 111 Other Topics Included in the Business Review114 Summary 117 CHAPTER 8 Financial Statement Analysis of an Established Business 119 Beginning the Investigation 120 The Raw Materials of an Analysis 121 Evolution of the Approach to Financial Statements 122 Illustration of the Basic Approach 123 Review of Neiman Marcus Financial Analysis 135 Summary 137 CHAPTER 9 The Limitations of Accounting Data 139 Basic Accounting Issues 141 Global Issues 141 Company-Specific Accounting Issues 145 The Fundamental Objective of Public Companies 149 Case Study: Stability Corporation 150 Summary 163 CHAPTER 10 Financial Analysis and Company Classification 165 Company Classifications 166 The Mature Company 166 The Growth Company 167 The Cyclical Company 169 The Declining Company 175 The Turnaround 175 The Pioneer 175 Financial Games 176 Extra Shares Outstanding? 180 Summary 180 CHAPTER 11 Financial Projection Pointers 181 The Cascade of Projections 182 The Typical Financial Projection 182 Alternate Means of Forecasting 183 Critiquing the Huntsman Chemical Projection 185 Preparing Projections 186 Cyclical Company Forecast 189 Hockey Stick Phenomenon 190 Summary 192 PART THREE Valuation and the Investment Decision 193 CHAPTER 12 Valuation Methodologies 195 Assessing Each Methodology 196 Applying Multiple Methodologies 197 Summary 198 CHAPTER 13 Intrinsic Value and Discounted Cash Flow 199 Issues in Applying Discounted Cash Flow 200 Discounted Cash Flow versus Relative Value 203 Discounted Cash Flow and the P/E Ratio 203 The Discounted Cash Flow Valuation Process 205 Summary 208 CHAPTER 14 Discounted Cash Flow: Choosing the Right Discount Rate 209 Beta 211 The Buildup Method for the Equity Rate of Return 212 Special Cases 213 Summary 215 CHAPTER 15 The Relative Value Approach 217 Real Estate Analogy 218 What’s the Right P/E Ratio? 218 Case Study: Temporary Staffing Services 219 Valuing an Initial Public Offering 222 Balance Sheet Items and Relative Value 223 How High Is Up? 223 Summary 223 CHAPTER 16 Marginal Performers 225 Defining the Problem Company 226 Small Companies and Relative Value 232 Summary 232 CHAPTER 17 The Mergers and Acquisitions Market, Security Analysis, and Valuation 233 Understanding Leveraged Buyouts 235 LBO Mechanics 236 Case Study: Keane, Inc. 237 How Much Can the PE Firm Pay? 237 LBO Valuation and the Security Analysis of a Publicly Traded Company 239 Strategic Takeover Values 240 Summary 241 CHAPTER 18 Sum-of-the-Parts Analysis 243 Background 243 Taxes Favor Spin-Offs versus Cash Sales 244 Sample Sum-of-the-Parts Analysis 245 Business Division Valuation 245 Nonoperating Corporate Assets and Liabilities 250 Unlocking Sum-of-the-Parts Values 250 Summary 251 CHAPTER 19 The Investment Recommendation 253 Summary Top-Down Analysis 255 Discounted Cash Flow Valuation 257 Relative Value/Sum-of-the-Parts Valuation Approach 259 Acquisition Value 261 Leveraged Buyout Method 262 Investment Recommendation 265 Summary 266 PART FOUR Special Cases 267 CHAPTER 20 Private Equity 269 Industry Segmentation and Size 269 Fee Structure 270 Private Equity Does Not Beat the S&P 500 271 Private Equity Funds and Information Collection 271 Private Equity Changes to the Public Company Valuation Methodology 272 Liquidity and Control Adjustments 273 Summary 277 CHAPTER 21 Natural Resource Companies 279 General Methodology 279 The Financial Reporting of Natural Resource Companies 281 Case Study: Encore Acquisition Company 284 Mining Companies 290 Summary 292 CHAPTER 22 Financial Industry Stocks 293 Product Lines 295 The Nature of Financial Assets 296 Two Sets of Skills 298 Lending 298 Large Commercial Banks 304 Summary 307 CHAPTER 23 Insurance Companies 309 General Background 309 Principal Functions of an Insurance Company 311 Insurance Company Regulation 312 Financial Statement Analysis: Property and Casualty Company 313 Financial Statement Ratios 317 Life Insurance Companies 317 Summary 319 CHAPTER 24 Highly Speculative Stocks 321 Background 321 Discounted Cash Flow 323 Case Study: Ballard Power Systems 324 Venture Capital Markups and IPOs 328 Historical Perspective 329 Security Analysis, Technology Stocks, and Portfolio 329 Summary 330 CHAPTER 25 Distressed Securities and Turnarounds 331 Investment Opportunities 332 Screening Technique 333 Recognize the Options of an Unsuccessful Turnaround 334 Financial Analysis of a Company with Leverage Problems 335 The Investment Decision 338 Evaluating Turnarounds 339 Liquidations 340 Summary 342 CHAPTER 26 International Stocks 343 The Role of Security Analysis 343 American Depositary Receipts 345 Developed Country Markets 346 Relative Value Multiples 349 Summary 350 CHAPTER 27 The Emerging Markets 351 Emerging Markets and Security Analysis 353 Stock Pricing Guidelines 357 Financial Projections 360 Emerging Market Equity Discount Rate 361 Relative Value in the Emerging Markets 364 Summary 366 PART FIVE In Conclusion 367 CHAPTER 28 Asset Booms and Busts 369 The 2008 Crash: Contributing Causes 369 Collapse of the U.S. Housing Bubble 370 Failure of the Referees 371 The Certainty of Another Crash 375 How Might Security Analysis and Business Valuation Change? 377 Summary 378 CHAPTER 29 Closing Thoughts 379 Notes 383 About the Author 385 Index 387

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Book SynopsisThe third edition of Property Valuation: The Five Methods introduces students to the fundamental principles of property valuation theory by means of clear explanation and worked examples. An ideal text for those new to the subject, the book provides 1st year undergraduate students with a working knowledge and understanding of the five methods of valuation and the ways in which they are interlinked.In this fully revised edition, the new author team have: restructured the chapters to ensure a more logical order outlined the economic theory of value and the rules and constraints under which a valuer works provided detailed consideration of each of the five recognised approaches placed a larger emphasis on the Discounted Cash Flow approach These revisions are all written in the concise and accessible style which has made previous editions of the book so successful. The new editTable of Contents1. The property market in context 2.Professional Valuation Practice 3. Valuation formulae 4. The comparative method 5. The investment method – traditional approaches 6. The investment method –discounted cash flow approaches 7. The residual method 8. The profits method – financial data 9. The profits method – valuation 10. Cost-based methods

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Book SynopsisSet includes ISBN: 9780471197157 Investment Management and ISBN: 9780471362470 Security Analysis on Wall Street: A Comprehensive Guide to Today's Valuation Methods, University Edition.

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Book SynopsisInternational Valuation Standards: a guide to the valuation of real property assets is an essential road map to using the new International Valuation Standards in everyday practice for real estate assets, explains their content, application and operation. It shows how to value assets including property, plant and equipment and is written in an explanatory style using commonly understood business English with as little jargon as possible. It takes a thematic format, focusing on the application of IVSs to investment property and owner-occupied property with the author addressing valuation instruction, operation and reporting under IVSs.Trade Review'This book is timely, with no other analysis of the content and application of IVS available to the property industry and property profession worldwide. This scholarly work does not simply describe International Valuation Standards but analyses them in detail, drawing together the context of globalisation with the historic and central concept of market value.' -Martin Brühl FRICS, Managing Director, Union Investment Real Estate GmbH, Hamburg, GermanyTable of ContentsForeword xv About the Author xvii Preface xix Acknowledgements xxi Introduction 1 1 Market Value 3 1.0 Introduction 3 1.1 Globalisation and valuation 4 1.1.1 Globalisation 5 1.1.2 International Financial Reporting Standards 6 1.1.3 Valuation 8 1.2 Evolution of valuation standard setting 10 1.2.1 Principal phases 10 1.2.2 Role of IVSC 12 1.2.3 Role of IVSs 13 1.2.3.1 Structure of IVSs 13 1.2.3.2 International, Regional and National Valuation Standards 16 1.3 Market value 17 1.3.1 Spencer concept of market value 18 1.3.2 IVS definition of market value 20 1.3.2.1 Estimated amount 22 1.3.2.2 An asset should exchange 23 1.3.2.3 On the valuation date 23 1.3.2.4 Between a willing buyer 23 1.3.2.5 And a willing seller 24 1.3.2.6 In an arm’s length transaction 25 1.3.2.7 After proper marketing 25 1.3.2.8 Where the parties had each acted knowledgably, prudently 26 1.3.2.9 And without compulsion 27 1.3.3 Highest and best use assumption 28 1.3.4 Transaction costs assumption 29 1.3.5 Market value in practice 30 1.4 Businesses and business interests, intangible assets and financial instruments 31 1.4.1 Businesses and business interests 31 1.4.2 Intangible assets 32 1.4.3 Financial instruments 32 1.5 Summary and conclusions 33 References 35 2 Concepts 37 2.0 Introduction 37 2.1 Conceptual framework 38 2.1.1 Approaching IVSs through economic theory 40 2.1.2 Concept of exchange 43 2.1.3 Conceptual framework – summary 46 2.2 Reconciliation with capital market theory 48 2.3 Definition of the market 50 2.3.1 What is a market? 50 2.3.2 Who are the participants in a market? 53 2.3.3 What is the role of market activity? 54 2.3.4 What is an asset? 56 2.3.5 Definition of the market – summary 57 2.4 Value vs. cost vs. price 58 2.4.1 Price 58 2.4.2 Cost 58 2.4.3 Value 59 2.4.3.1 Market value 60 2.4.3.2 Investment value 62 2.4.3.3 Synergistic value 65 2.4.3.4 Fair value 67 2.4.3.5 Special value 70 2.4.3.6 Relative contribution to value 72 2.4.4 Reconciliation to the conceptual framework for valuation 73 2.5 Summary and conclusions 74 References 77 3 Definitions 79 3.0 Introduction 79 3.1 Definition of valuation 80 3.1.1 What is valuation? 81 3.1.2 What is value? 82 3.1.3 What is a basis of value? 82 3.1.4 What is a valuation input? 86 3.1.5 What is an assumption? 89 3.1.6 What is a special assumption? 90 3.1.7 Definition of valuation – summary 92 3.2 Definition of contextual terms 93 3.2.1 Real estate 93 3.2.2 Real property 94 3.2.3 Investment property 96 3.2.4 Trade related property 97 3.2.5 Intangible asset 98 3.2.6 Goodwill 98 3.2.7 Market rent 98 3.2.8 Definition of contextual terms – summary 99 3.3 Principal approaches to valuation 99 3.3.1 Cost approach 100 3.3.2 Income approach 102 3.3.2.1 Income capitalisation 102 3.3.2.2 Discounted cash flow 104 3.3.2.3 Option pricing models 105 3.3.3 Market approach 105 3.3.3.1 Accumulation step 106 3.3.3.2 Analysis step 107 3.3.3.3 Adjustment step 107 3.3.3.4 Application step 108 3.3.3.5 Market approach – summary 109 3.3.4 Principal approaches to valuation – summary 109 3.4 Summary and conclusions 110 References 111 4 Valuation Process 113 4.0 Introduction 113 4.1 Preliminary questions 114 4.2 Instructing the valuer 116 4.2.1 Transparency 116 4.2.2 Nominated issues to be addressed in written instructions 117 4.2.2.1 Identification and status of valuer 118 4.2.2.2 Identification of the client and any other intended users 119 4.2.2.3 Purpose of the valuation 120 4.2.2.4 Identification of the asset or liability to be valued 120 4.2.2.5 Basis of value 121 4.2.2.6 Valuation date 122 4.2.2.7 Extent of investigation 122 4.2.2.8 Nature and source of the information to be relied upon 123 4.2.2.9 Assumptions and special assumptions 123 4.2.2.10 Restriction on use, distribution or publication 124 4.2.2.11 Confirmation that the valuation will be undertaken in accordance with the IVS 125 4.2.2.12 Description of report 125 4.2.3 IVS 101 in practice 126 4.3 Undertaking the valuation 126 4.3.1 Extent and nature of investigation 127 4.3.2 Selection of approach or method 128 4.3.3 Record keeping 129 4.3.4 IVS 102 in practice 129 4.4 Reporting the valuation 130 4.4.1 Transparency 131 4.4.2 Nominated issues to be addressed in the valuation report 131 4.4.2.1 Identification and status of valuer 132 4.4.2.2 Identification of the client and any other intended users 133 4.4.2.3 Purpose of the valuation 133 4.4.2.4 Identification of the asset or liability to be valued 133 4.4.2.5 Basis of value 134 4.4.2.6 Valuation date 134 4.4.2.7 Extent of investigation 134 4.4.2.8 Nature and source of the information to be relied upon 134 4.4.2.9 Assumptions and special assumptions 135 4.4.2.10 Restriction on use, distribution or publication 136 4.4.2.11 Confirmation that the valuation will be undertaken in accordance with the IVS 136 4.4.2.12 Valuation approach and reasoning 137 4.4.2.13 Amount of the valuation or valuations 137 4.4.2.14 Date of the valuation report 138 4.4.2.15 Reporting the valuation 138 4.4.3 IVS 103 in practice 138 4.5 Summary and conclusions 139 References 141 5 Valuation of Investment Property 143 5.0 Introduction 143 5.1 Valuation of investment property 144 5.1.1 IVS 230 Real Property Interests 145 5.1.1.1 IVS 230 Real Property Interests in practice 146 5.1.2 IVS 220 Plant and Equipment 147 5.1.2.1 IVS 220 Plant and Equipment in practice 148 5.1.3 TIP 1 Discounted Cash Flow 149 5.1.3.1 Income capitalisation approach 150 5.1.3.2 Discounted cash flow approach 151 5.1.3.3 TIP 1 Discounted Cash Flow 152 5.1.3.4 IFRS 13 Fair Value Measurement 155 5.1.3.5 Summary – Valuation of investment property in IVSs 157 5.1.4 Investment property in IFRS 157 5.1.4.1 IAS 40 Investment Property 158 5.1.4.2 IAS 36 Impairment of Assets 161 5.1.4.3 IFRS 5 Non-Current Assets Held for Sale and Discontinued Operations 161 5.1.4.4 IAS 17 Leases 161 5.1.4.5 IVS 233 Investment Property Under Construction 162 5.1.4.6 Summary – Investment property in IFRS’s 165 5.2 Valuation of investment property for financial reporting 165 5.2.1 IVS 300 Valuations for Financial Reporting 166 5.2.1.1 IVS 300 Valuations for Financial Reporting in practice 167 5.2.2 IFRS 13 Fair Value Measurement 168 5.2.2.1 IFRS 13 highest and best use 169 5.2.2.2 IFRS 13 definition of fair value 169 5.2.2.3 IFRS 13 valuation techniques 174 5.2.2.4 IFRS 13 fair value hierarchy of inputs 175 5.2.2.5 IFRS 13 Fair Value Measurement in practice 179 5.2.3 Valuation of investment property for financial reporting 180 5.3 Valuation of investment property for secured lending 181 5.3.1 IVS 310 Valuations of Real Property Interests for Secured Lending 181 5.3.1.1 Valuation instructions and valuation reporting 181 5.3.1.2 Cautionary issues in valuations of real property for secured lending purposes 182 5.3.1.3 IVS 310 Valuations of Real Property Interests for Secured Lending in practice 183 5.3.2 Summary – Valuation of investment property for secured lending 185 5.4 Summary and conclusions 185 References 187 6 Valuation of Owner Occupied Property 189 6.0 Introduction 189 6.1 Valuation of owner occupied property 190 6.1.1 IVS 230 Real Property Interests 191 6.1.1.1 IVS 230 Real Property Interests in practice 193 6.1.2 IVS 220 Plant and Equipment 194 6.1.2.1 IVS220 Plant and Equipment in practice 196 6.1.3 TIP 2 The Cost Approach to Tangible Assets 197 6.1.3.1 Bases of value 199 6.1.3.2 Value of land 200 6.1.3.3 Reproduction or replacement of buildings and/or improvements 200 6.1.3.4 Cost elements 202 6.1.3.5 Depreciation 203 6.1.3.6 Summary – Valuation of owner occupied property in IVSs 206 6.1.4 Owner occupied property in IFRS 207 6.1.4.1 IAS 16 Property, Plant and Equipment 207 6.1.4.2 IAS 36 Impairment of Assets 212 6.1.4.3 IFRS 5 Non-Current Assets Held for Sale and Discontinued Operations 213 6.1.4.4 IAS 17 Leases 214 6.1.4.5 Summary – Owner occupied property in IFRS 215 6.2 Valuation of owner occupied property for financial reporting 215 6.2.1 IVS 300 Valuations for Financial Reporting 216 6.2.1.1 Aggregation 216 6.2.1.2 Depreciation 217 6.2.1.3 Classification of property leases 219 6.2.1.4 IVS 300 Valuations for Financial Reporting in practice 219 6.2.2 IFRS 13 Fair Value Measurement 220 6.2.2.1 IFRS 13 highest and best use 220 6.2.2.2 IFRS 13 definition of fair value 221 6.2.2.3 IFRS 13 valuation techniques 221 6.2.2.4 IFRS 13 fair value hierarchy of inputs 222 6.2.2.5 IFRS 13 fair value measurement in practice 222 6.2.3 Valuation of owner occupied property for financial reporting 223 6.3 Valuation of owner occupied property for secured lending 223 6.3.1 IVS 310 Valuations of Real Property Interests for Secured Lending 223 6.3.1.1 Valuation instructions and valuation reporting 224 6.3.1.2 Cautionary issues in valuations of real property for secured lending purposes 225 6.3.1.3 IVS 310 Valuations of Real Property Interests for Secured Lending in practice 227 6.3.2 Summary – Valuation of owner occupied property for secured lending 231 6.4 Summary and conclusions 231 References 233 Index 235

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Book Synopsis

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Book SynopsisDerivative contracts are incredibly powerful tools for managing expected return and risk. In order to take full advantage of the opportunities they afford, practitioners need to have a thorough understanding of how derivative contracts are valued.Table of ContentsPreface ix Acknowledgments xxv About the Author xxvii Part One Derivative Markets 1 Chapter 1 Derivative Contracts and Markets 3 Part Two Fundamentals of Valuation 49 Chapter 2 Assumptions and Interest Rate Mechanics 51 Chapter 3 Relation between Return and Risk 89 Part Three Forwards/Futures/Swap Valuation 119 Chapter 4 No-Arbitrage Price Relations: Forwards, Futures, Swaps 121 Chapter 5 Risk Management Strategies: Futures 143 Part Four Option Valuation 173 Chapter 6 No-Arbitrage Price Relations: Options 175 Chapter 7 Valuing Standard Options Analytically 201 Chapter 8 Valuing Nonstandard Options Analytically 261 Chapter 9 Valuing Options Numerically 303 Chapter 10 Risk Management Strategies: Options 347 Part Five Stock Derivatives 381 Chapter 11 Stock Products 383 Chapter 12 Corporate Securities 419 Chapter 13 Compensation Agreements 451 Part Six Stock Index Derivatives 467 Chapter 14 Stock Index Products: Futures and Options 469 Chapter 15 Stock Index Products: Strategy Based 517 Part Seven Currency Derivatives 563 Chapter 16 Currency Products 565 Part Eight Interest Rate Derivatives 601 Chapter 17 Interest Rate Products: Futures and Options 603 Chapter 18 Interest Rate Products: Swaps 637 Chapter 19 Credit Products 679 Chapter 20 Valuing Interest Rate Products Numerically 705 Part Nine Commodity Derivatives 729 Chapter 21 Commodity Products 731 Part Ten Lessons Learned 771 Chapter 22 Key Lessons 773 Appendices A. Elementary Statistics 779 B. Regression Analysis 821 C. Statistical Tables 861 D. Glossary 869

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Book SynopsisThis book presents the main valuation approaches that can be used to value financial institutions.Table of ContentsPreface vii Acknowledgments ix 1 Bank Business Models 1 1.1 Economics of banking 1 1.2 Commercial banks 3 1.3 Investment banks 7 2 Financial Statements Analysis for Banks 15 2.1 Balance sheet 15 2.2 The US GAAP for banks 44 2.3 Profit & loss statement 49 2.4 Major differences between IAS/IFRS and US GAAP 51 2.5 Example of IAS/IFRS application 54 3 The Regulatory Capital for Banks 61 3.1 Regulatory capital requirements 61 3.2 Basel II 68 3.3 The reform of Basel III 73 3.4 Managing the regulatory capital 78 4 Assessing and Preparing the Business Plan for a Bank 81 4.1 Status quo analysis 82 4.2 Internal consistency 85 4.3 External consistency 92 4.4 The forecasting model of a bank 96 5 Bank Valuation 105 5.1 Why bank valuation is different 105 5.2 Discounted returns model 108 5.3 Relative valuation 123 5.4 Asset/liability-based valuation 137 5.5 The sum of the parts framework 143 5.6 Bank valuation in M&A 144 5.7 The valuation of Wells Bank 148 6 Insurance Business Models and Financial Statements 159 6.1 The business model of insurance companies 159 6.2 Segmentation by products 160 6.3 Distribution channels 162 6.4 Insurance balance sheet under US GAAP 162 6.5 Insurance contracts under IAS/IFRS 167 6.6 Case study 172 7 Regulatory Capital for Insurance Companies 177 7.1 Insurance industry regulation in the US 177 7.2 Current US system 178 7.3 Solvency II – European-based regulation 181 7.4 Main differences between solvency II and US regulation 190 8 Assessing the Business Plan for an Insurance Company 193 8.1 Status quo analysis 193 8.2 Internal consistency 195 8.3 External consistency 200 8.4 The forecasting model 204 9 Insurance Companies Valuation 209 9.1 Appraisal value 209 9.2 Relative valuation 215 9.3 The case of “general insurance” 216 10 The Valuation of Other Financial Companies 227 10.1 The valuation of finance companies 227 10.2 The valuation of funds 229 References 233 Index 235

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