itsual Valuation
Overview
Valuation estimates what something is worth under stated assumptions. Method choice, assumption quality, and humility about uncertainty determine usefulness.
When to Use
- M&A and investment decisions
- Fundraising and dilution analysis
- Internal project or business-unit valuation
- Fairness and impairment contexts
Core Methods
- DCF — intrinsic value from projected cash flows
- Trading multiples — relative value vs peers
- Precedent transactions — relative value vs deals
- Asset-based — when earnings power is secondary
Principles
- Method should fit the asset and available data
- Garbage assumptions in → precise-looking garbage out
- Ranges and sensitivities beat false precision
- Value depends on who the buyer is and what synergies exist
Verification
- Method selection is justified
- Key assumptions are explicit and stress-tested
- Output is presented as a range with drivers