Discounted Cash Flow-based Valuation Methodology as Tested by a Public Market Transaction Harvard Case Solution & Analysis

Trends emerging lately, including divestitures, spin-offs and class action suits, make an understanding of valuation of companies with on-going operations critical for a company's directors, but also for supervisors and for investors. Initially, the discounted cash flow method, which is used for valuation, is discussed in this note. It will first be a guide to managers of businesses in their own attempts to follow worth optimizing strategies; second, to portfolio managers and security analysts within their effort to find the true economic value of an organization and its equity; lastly, investment bankers will be guided in their advisory function of firms involved in merger transactions and restructuring.

This note will not demonstrate the way to value companies in financial distress; in such events, a contingent claims valuation will be proper. With the valuation of a Canadian business using real financial data, the discounted cash flow method is demonstrated.

Publication Date: 10/28/2005

This is just an excerpt. This case is about Finance

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Discounted Cash Flow-based Valuation Methodology as Tested by a Public Market Transaction

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