Book Description
Financial statements are the basis for a wide range of business analysis. Managers, securities analysts, bankers and consultants all use them to make business decisions. There is strong demand among business students for course materials that provide a framework for using financial statement data in a variety of business analysis and valuation contexts.
Customer Reviews:
Case study is worth reading..........2007-04-21
First part of this book is about reading financial statements. If you already know the statements, you don't need to read the first part. However, even if you can read the statements, the second part, case study, will be helpful to your real analysis.
good case study.......2006-04-30
I found the chapters are not very in detail. I was using it as the textbook and the lecture notes are way better. I read the book at the begginning but stopped in the middle as it doesn't really help. However, the end of chapter case studies are pretty good.
Useful if cumbersome.......2002-12-16
This review applies to the edition WITH CASES. This isn't recommended for anyone who is just starting out with choosing investments. Beginners might be better off with a more general overview of financial statement analysis (FSA) like Higgins' "Analysis of Financial Statements" or Fraser and Omriston's "Understanding Financial Statements".
This was one of two textbooks used in a financial statement analysis course I took for my MBA. Most chapters are down-to-earth and as a whole the book is well-written.
The other text we used was Penman's "Financial Statement Analysis and Security Valuation" which was also a great resource as far as gaining a basic understanding of the mechanics of financial statements and how to build a valuation model.
I contrast the two books because while Penman provides a run-down of several different models analysts can use (and does a good job of arguing for the Residual Income Model of valuation model as being the best), Palepu delves into the implications of companies' choices of accounting methods and provides more insight into what different kinds of businesses should look like in terms of their financial statements.
The cases at the end of each chapter add a lot of value to the text because they get students to focus on the specific issues detailed in each chapter. By picking apart different companies' financial statements we learned to use financial statements to assess the success or failure of companies' efforts to carry out their business strategies.
I rate it "Good - 4 stars"
Required Text.......2002-09-17
This is a required text at my school, but after having read the first 5 chapters there is almost nothing of value that I have read. I have spoken to several people that have used this text for the class in prior semesters and they told me that they had stopped reading it after the first several chapters also.
Excellent Capstone Book.......2000-10-12
This book is an excellent description of all the elements that would go into reviewing a potential investment opportunity. It is not a detailed book in one category, such as financial accounting, but it ties business strategy analysis, financial analysis, forecasting analysis, and valuation analysis together. Most other books focus on one area and don't tie all of these together well. This one takes you down the path to evaluating the opportunity to its fullest. It is an excellent capstone book after you have sifted through the details of strategy, finance, and accounting.
Average customer rating:
- Very fast, superve conditions
- Difficult to use, disorganized
- Thanks you
- new bk delivered within a week
- This is a review of only the CD - i.e., Excel model
|
Valuation: Measuring and Managing the Value of Companies, Fourth Edition
McKinsey & Company Inc. ,
Tim Koller ,
Marc Goedhart , and
David Wessels
Manufacturer: Wiley
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Valuation: Measuring and Managing the Value of Companies (Wiley Finance)
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Valuation: Measuring and Managing the Value of Companies (Wiley Finance)
ASIN: 0471702188 |
Book Description
Hailed by financial professionals worldwide as the single best guide of its kind, Valuation, Fourth Edition with CD-ROM combines is thoroughly revised and expanded to reflect business conditions in today’s volatile global economy. Valuation provides up-to-date insights and practical advice on how to create, manage, and measure an organization’s value. Along with all-new case studies that illustrate how valuation techniques and principles are applied in real-world situations, this comprehensive guide has been updated to reflect the events of the Internet bubble and its effect on stock markets, new developments in academic finance, changes in accounting rules (both U. S. and IFRS), and an enhanced global perspective. This package contains a solid framework that managers at all levels, investors, and students have come to trust.
Customer Reviews:
Very fast, superve conditions.......2007-06-08
I strickly recommend this shop: just 10 days to Barcelona and new!
Difficult to use, disorganized.......2007-04-12
I used this book for an MBA finance class but I am not keeping it as a reference. I felt it was convoluted and badly organized. It was difficult to look up subjects using the index when you wanted to just crack the book and find a formula or look for something specific. Since that's what I would do if I kept the book as a reference, the value for me is not there. I'm looking for a different book that is better organized and easier to understand for my reference book.
Thanks you.......2007-02-12
I got the book right away and it is still in perfect condition. I am absolutely satify with market order. Thanks you so much.
new bk delivered within a week.......2007-02-11
the shipping fee is free and i got the bk within a week. Most importantly, it's a new bk which price is nearly half of the original price in the bookstore!! awesome!
This is a review of only the CD - i.e., Excel model.......2006-03-28
Let me say that I like the McKinsey model and use it a lot to value certain companies. Overall, I found that the Results section of the model really helped me understand the detailed nuances of the McKinsey model, especially given that the book itself is sometimes vague.
I gave the CD product 4 stars, instead of 5 stars, because I felt that:
1) The PDF instructional manual on using the model is woefully inadequate.
2) There were a few serious errors in the model.
3) The model took the easy way out on a lot of difficult valuation items.
1. The PDF manual is woefully inadequate. Reading it, you think the model is self-explanatory, but it really isn't. You have to really study the numbers to understand what assumptions the model wants you to make. In this regard, the book is marginally helpful, the examples in the book is slightly more helpful. In many cases, I had to turn to other valuation texts to figure out a few things.
2. The model is for the most part, error-free. But I did catch two calculation errors that I will share, so that others can avoid the pain. First, in the Forecast Drivers tab, there is a data row called Capex. It looks back at the optional Capital Expenditure line as an off-balance sheet item in 'Historical Data.' This is inconsistent with the book's data driven approach and specification that CapEx = change in Net PPE + Depreciation. You may want to recorrect the Capex formula to specify this. Why the model asks us to manually specify the Capital Expenditures in Historical Data, I have no idea.
Another error I saw is in the Results tab. In the Ratios section, there is one called 'Enterprise value / EBITA'. If you look at the formula, it points to EBIT. You need to correct this by having it point to Reported EBITA.
3. I think the model takes the easy way out on a lot of the most difficult items. For example, the book advocates treatment of R&D as a capitalized asset, and yet the model excludes this entirely. The book advocates dealing with the market value of debt, but the model just incorporates the book value of debt. The model leaves as an entry item the value of the lease as a balance sheet item, when it you could easily just as well incorporate extensions to model this. This is the same for options, convertible debt, customer receivables, unutilized/discontinued assets, etc.
Basically, the book is aggressive in advocating a firm estimation of operational value, NOA value, and Debt/DE claims, but the model is much less ambitious.
This does not make the model useless. It's a great data-driven model. It just requires the user to build sophisticated extensions to deal with the most complicated parts. At the same time, this is no cheap model. They are probably making lots of money on it. I would have expected the folks at McKinsey to provide extensions to handle the most complicated aspects of valuation, in addition to the core items.
Book Description
Karen Blumenthal, like most people, is mystified by the stock market. Just why is it, she wonders, that seemingly good news can send a stock plummeting and bad news can send it skyrocketing again?
In Grande Expectations, she shows how money is made and lost by following one of America’s hottest growth stocks, Starbucks, through a year of rapid store openings, fancy new drinks, and clever promotions, revealing how the many players—big and small investors, company management, analysts, and the media—propel its shares up and down.
Blumenthal pulls back the curtain on the stock market to expose its quirks and inner workings, from the power of a penny of earnings and the unexpected impact of a stock split to the image-enhancing effects of a brand of bottled water. With a fly-on-the-wall, character-driven narrative, Grande Expectations not only makes investing interesting but also will help you make smarter and savvier investing choices by:
•Understanding how big pension and mutual fund managers decide whether to buy more Starbucks—or dump it
•Seeing the unique ways that analysts and other finance professionals assess an investment—dissecting not only the numbers but also the company’s management, demographics, and global opportunities
•Learning how Starbucks executives manage our expectations and keep excitement percolating about the business—and the stock
•Watching how a stock is traded and how that might affect your buying or selling
•Gleaning how multibillion-dollar private hedge funds make money on infinitesimal changes in a stock’s price
•Entering the dark, strange world of the short sellers
•Realizing how different people can make absolutely opposite bets and all still come out ahead
You’ll come away with new insights into how the stock market really works—the power of expectations, stock buybacks, and profits—and explore Starbucks’ phenomenal growth and whether it is sustainable. By unraveling the market’s mysteries, Grande Expectations shows how investing can be both profitable and understandable. Get ready for the ride of your life—and a lifetime of fruitful stock market success.
Customer Reviews:
Steve Forbes Loved It and You Will, Too........2007-08-04
Steve Forbes reviewed this book and loved it, and I think it appeals equally to people who understand the market well, and those who don't. Blumenthal details all the information you wish you had, but don't have time to gather, when investing in a stock. Mostly, though, it's a fascinating, fun read, and that's the reason to pick it up!
Otherwise dry material rendered frappalicious.......2007-08-04
I seldom go to Starbucks and can rarely stomach lengthy financial analysis, so I never expected to be so consumed by a book that I just happened across and then couldn't put down. As a liberal-arts-type reader, I was as riveted by this utterly charming biography of a stock as I routinely am by a great man's life story. As originally unappetizing to me as the thought of 300 pages detailing a company's year-long stock performance was the sheer pleasure here of following the author's wide-eyed pursuit of answers about why stocks rise and fall. As Ms. Blumenthal chases down a broad swath of individuals to learn all she could about the history and future prospects for Starbucks, I found the questions she put to Howard Schultz and other company execs, to security analysts and fund managers, to small DIY investors, and to many others, were exactly the kind of questions I wanted asked. Assuming you're not already a full-time securities pro, reading this book -- although it won't instantly certify you as a financial guru -- will, for less than the cost of a few macchiatos and frappucinos, make you far wiser about this amazing company and the ways of the market. Concentrating so deeply on one company enables the author to show how stock buybacks, black-box trading operations, analyst reports, and dozens of other abstract concepts actually work in a real-world case history over an extended period. Thus material that would otherwise seem academic and dry becomes far more palatable and understandable. Kudos to Ms. Blumenthal for wonderful reporting and making stock-tracking acutely interesting and intelligible.
Cramer Recommended It?!.......2007-08-03
I am very surprised that Jim Cramer likes this book. There's really nothing to it. If you've owned a few stocks before, and paid attention to them, this book will offer you nothing new.
Aimed at beginners.......2007-06-11
One can see that there is already 40 used books, it's quite impressive for such a "young" book. I think there is a deep misunderstanding about this financial opus; Jim Cramer, I like him very much incidentally, in his review of the book emphasizes that it's gonna be a "in depth" study of how the stock fluctuates month in and month out... it's a lie, as a profesionnal analyst, I did not learn anything and I'll take a bet that people in the institutional world will not either.
As a pro, I was looking forward to reading the chapters titled "investors" and the second one even more "traders". Let me get this straight: the first one digs into the ROE, the P/E and Philip Fisher, quite enthralling for novices but for a financial adviser, this is too simplistic. And the second chapter is mostly about black-boxes and somewhat of a market maker. However, if you want to learn any "trading secret" or a mere "trading idea" out of them, forget it, you assuredly won't.
All in all this is a fun read, entertaining but just interesting for people not knowing anything about the company Starbucks (my case; I know sorry), about its resilience during a stunning bear market or for people not knowing anything about the stock market.
But if you're an institutional analyst, trader or broker, this is a lie by Jim Cramer, the "in-depth" of this book is more in the other reviews above and Jim's.
To wrap things up, there is one thing that is extremely annoying in this book, which has already not much of an exciting style into it per se (this is not a Michael Crichton, that's for sure) someone must talk to the author and tell her about the "present" tense to spice a story up a notch, all the book is written "in the past" and it gives all the more a boring feeling of what could have been a far better book if wrote with the present tense, as it is habitually the case in financial opuses.
5 stars for novices, 2 stars for pros (to read on a plane or on the beach to take a breather). I'm certain that's why there are so many "used" books for sell already. Beginners will love it, seasoned pros will wind up with the fun, only.
Grande Explanation.......2007-05-16
This is a highly readable and interesting story about a cultural phenomena. The author gives us a "year-in-the life" story about Starbucks and its stock price fluctuations, while engaging the reader in behind the scenes details. She has woven a fascinating story without losing the reader to arcane financial jargon. The book is very balanced and a fun read. I highly recommend it -- Steve
Average customer rating:
- A bit hard to understand
- This is a Terrific Resource for Practitioners Not Investors
- Super
- An Excellent Private Equity Valuation Primer
- Good technique, directed at the professional practitioner
|
Valuing A Business, 4th Edition
Shannon P. Pratt ,
Robert F. Reilly , and
Robert P. Schweihs
Manufacturer: McGraw-Hill
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Binding: Hardcover
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ASIN: 0071356150 |
Book Description
First published in 1981, Valuing a Business is today the world's most widely followed valuation reference. As more professional associations than ever offer valuation education and credentials, this Fourth Eidtion - with 10 new chapters that significantly expand the book's scope - promises to appeal to an even broader market. This easy-to-use reference features increased emphasis on vlauation court cases and decisions; new information on arbitration and mediation; updated data on stock option valuation; and much more.
Download Description
This easy-to-use reference features increased emphasis on valuation court cases and decisions; new information on arbitration and mediation; updated data on stock option valuation; and much more.
Customer Reviews:
A bit hard to understand.......2004-12-02
I had an older edition of this book, which wasn't very helpful, so I bought the new one hoping it was an improvement, but came away rather disappointed because, for an instructional manual, this one is hard to follow. Apparently, the authors have been in the valuation business for a long time, but it's not always easy to translate experience effectively into words. For most, this is a how-to project with potentially big consequences, so the instructions should be more clear than this. I liked "Unlocking the Value of Your Business" as an alternative. Once I read that book, I understood better what these guys were talking about.
This is a Terrific Resource for Practitioners Not Investors.......2004-09-16
I am a lawyer who has tried valuation cases and this book is a terrific resource for valuation experts and attorneys. I used it to defend and to attack witnesses. It is respected. It is used at the Federal Judicial Center as training for judges on these issues. It is not at all appropriate for people who are trying to value companies for investment purposes.
Super.......2003-01-08
This book, guide, reference, ... or what ever you name it. is essential for all business, financial and investment guides.
An Excellent Private Equity Valuation Primer.......2002-04-08
I have found Mr. Pratt's book to be an outstanding and practical general reference guide to valuing privately-held businesses. Due to the book's breadth of material and balanced focus on both the science and art of valuation, I have found "Valuing A Business" to be an excellent professional reference for anyone entering the field of business valuation. I highly recommend it.
In addition to the common "science side" valuation techniques, issues, and approaches that are found in many valuation textbooks, Pratt provides unique, valuable insight into the "art side" of valuation. The book also includes real life project execution considerations for litigation support, expert witness testimony, and taxation. "Valuing A Business" offers solid information to assist a practitioner in building a quality framework for conducting a comprehensive private company valuation.
Good technique, directed at the professional practitioner.......2001-10-18
I take issue with the reviewer who suggested that Tom Copeland/McKinsey's book "Valuation" is better than this one or is more directed at valuaing big businesses. ... On the other hand, it should be said that valuation techniques do not differ between big companies and small companies (especially if big/small companies are publically traded). Valuation techniques vary depending on (a) what sort of asset is being valued (public equity, vs. private equity, vs. business assets as a whole, etc) and (b) why valuation is being done (for M&A, litigation between business partners, divorce, ESOPs, for equity investment/divestment). If an investor is valuing a $50 Billion public company and a $50 million public company, the technique used for both is (probably) the same.
If anything, this book does an excellent job in reminding us of the diversity of valuation techniques in use, and the diversity of reasons for doing valuations. Given the frequency with which privately held companies are bought, one would think that knowing how to value companies whose stock is not publically traded is useful for general businesspeople, not just accountants and attorneys. But if you absolutely insist that you just want to know how to value publically traded companies and don't give a hoot for calculating "private equity discounts" or "minority shareholder discounts", then I would recommend Aswath Damodaran's books "Damodaran on Valuation", "The Dark Side of Valuation" or "Investment Valuation". Damodaran, professor of Finance at NYU, actually uses the same techniques taught here, but applied to public equity investing and with different names (for example, what is called the "Market approach" here is just what Damodaran calls "relative valuation" in a different context).
Book Description
From the "guru to Wall Street's gurus" comes the fundamental techniques of value investing and their applications
Bruce Greenwald is one of the leading authorities on value investing. Some of the savviest people on Wall Street have taken his Columbia Business School executive education course on the subject. Now this dynamic and popular teacher, with some colleagues, reveals the fundamental principles of value investing, the one investment technique that has proven itself consistently over time. After covering general techniques of value investing, the book proceeds to illustrate their applications through profiles of Warren Buffett, Michael Price, Mario Gabellio, and other successful value investors. A number of case studies highlight the techniques in practice.
Bruce C. N. Greenwald (New York, NY) is the Robert Heilbrunn Professor of Finance and Asset Management at Columbia University. Judd Kahn, PhD (New York, NY), is a member of Morningside Value Investors. Paul D. Sonkin (New York, NY) is the investment manager of the Hummingbird Value Fund. Michael van Biema (New York, NY) is an Assistant Professor at the Graduate School of Business, Columbia University.
Customer Reviews:
Exceptional Addition for Any Investor.......2007-07-07
Fantastic summary of modern value investing. Greenwald looks at the discipline with the critical eye of a professor, making it more informative than many other books about the subject. Even seasoned value investors will learn from this book.
Must-read for value investors!.......2007-07-01
What I Liked About It
* Details several valuation methods that I haven't seen in other non-academic, mainstream investing books.
* Several real-world examples to apply valuation methods
* Great treatment of brands vs. franchises
What Needed Work
* Various investor profiles unnecessarily fill the 2nd half of the book.
* Attempts at quantifying "franchise" felt a bit forced.
Greenwald's book ranks at the very top of my investing bookshelf. I read this after having read Graham, Greenblatt, Klarman, Lynch, P. Fisher, Cramer (yes, that Cramer!), Dorsey, Buffett, and Browne among others. Amazingly, this book broached a number of topics not covered by those prominent authors. As such, this book is required reading for the discerning investor.
The most important concepts this book gave me were valuation methods based on net asset value (NAV) and earnings power value (EPV). Before this, I had trouble valuing companies that didn't generate steady cash flow or have commodity assets. Now I have more angles from which to examine a prospect and find undervalued companies besides running a DCF analysis. We've heard about past opportunities where you could have bought a company like McDonalds for the price of its real estate and gotten the business for free. Greenwald shows you how to find these opportunities using his asset valuation methods. He also gives you the tools to fairly value "tech" companies (or any enterprise with heavy intangible capital). Less convincing is his discussion of earnings power value but nonetheless, it's still helpful to be able to examine a company's earnings ability.
Greenwald also spends time discussing problems with discount cash flow analysis (DCF) as well as franchises. While his thoughts on these subjects were thought-provoking, I don't completely agree with his conclusions.
On DCF, Greenwald says that trying to project future growth rates 5-10 years forward is folly and will distort your DCF analysis. While he is right that future growth projections are problematic, that doesn't mean DCF isn't helpful for individual investors. Greenwald concedes that his preferred methodologies require, in some instances, in-depth knowledge of the business and industry of the company being examined. The non-professional (me!) may not have this expertise and any estimates of asset worth or capital costs would be just as faulty as analyst growth estimates. In fact, an adjusted future growth rate derived from a number of industry-knowledgeable analysts may be more generally accurate (if imprecise).
The main knock against the book is the whole second half consisting of eight investor profiles. There's nothing wrong with them per se except that they are in the book at all. If I had wanted a book on famous value investors, I would have picked up something by Kirk Kazanjian. The chapter on Warren Buffett is almost exclusively quotations taken from freely available public reports and Seth Klarman has written his own book on investing.
I've written a more-indepth review at my enlightened-american website but in summary, my advice is to soak in the 1st half of the book and skip the 2nd half entirely. Dig into an annual report instead and start applying what Greenwald's shown you.
A MUST READ.......2006-11-13
find weak areas with strong fundamentals is secret according to this book. this is a good combo to Investing Without Losing (ISBN: 0978834607 NOT on amazn, on other stores), one is about the concept and the latter is about execution
the most comprehensive review on value.......2006-09-20
In short, this book is grounded on economics and common sense. It summarizes "the intelligent investor", "security analysis", and the modern books on Buffett pretty well (there are other paths to heaven besides Buffett's). Its verbiage is beautifully chosen and a joy to read, especially for avid value investors. Best of all it is a scholarly work - if you're sick and tired of the commercial investing books that flood bookstores, buy this book.
Must-read for serious investors of any stripe.......2006-08-12
A must-read for investors of any stripe, growth or value. This book, written by a couple of the most popular professors at Columbia Business School, explains the innovations in the field of value investing as practiced by some of the most successful investors in the field. (fair disclosure: I will be taking courses from them in 2007) This book successfully bridges the gap between the traditional Graham & Dodd style of value investing to what works today. Although it's a paperback, it's written with the density of a textbook. The writing style is not light, and the actual meat of the book takes some time to wade through. If you don't have some experience in accounting or corporate finance, then Joel Greenblatt's The Little Book That Beats the Market is good to read first.
The substance of this book is a process for modern value investing: value investing is not investing in lousy companies just because they appear cheap. The authors also teach a structured way to value a company. Finally, the authors address how to value growth.
First, before reading this book I had the mistaken impression that value investing was all about investing in the ugliest, least interesting company you could find just because it had a low P/E ratio. I was completely wrong! (Maybe I have attended too many stock pitch sessions and heard too many poultry stocks and encyclopedia companies get pitched.) Modern value investing, according the authors: "When B. Graham went scouring financial statements looking for his net-nets, it did not concern him that he may have known little about the industry in which he found his targets. All he was concerned with were asset values and a margin of safety by that measure. A contemporary value investor had better be able to identify and understand the sources of a company's franchise and the nature of its competitive advantages. Otherwise he or she is just another punter, taking a flier rather than making an investment." What a breath of fresh air to read this passage.
Second, this book lays out a structured way to value a company by first looking at reproduction costs of assets, then earnings power, and finally the value of profitable growth. I, like the authors, find traditional DCF valuations to be plagued by false precision. The authors' more practical method starts by adjusting the balance GAAP balance sheet to calculate the cost of the assets for a potential business entrant. Next, the company is valued based on the earnings generates consistently, assuming no growth. A key insight is the value of the franchise: the difference between asset value and Earnings Power Value is the value created by a company that has significant competitive advantage. Last, the value of profitable growth is considered.
As a self-admitted recovering growth stock addict, I learned from this book that value investors are skeptical about growth for two reasons. One reason is that it is so hard to predict, but more important, many times growth is not worth much. Unless the return on capital (ROC) of the company is higher than the cost of capital, growth does not create value. (I am a slow learner; Greenblatt's example in The Little Book That Beats the Market of opening an additional gum store is even clearer to me.) The growth matrix and formulas in the book were a revelation to me. The surprising thing is how little multiple expansion a stock deserves based on growth. Unless a company truly has a franchise, expanding into other areas and "diversifying" the business often destroys value. And growth for growth's sake will not make a stock go up.
This book brings value investing into the modern stock market. Modern value investors still use traditional valuation principles in a structured way, but they also consider the value of growth and the attractiveness of the business. What a relief, I not restricted to buying typewriter and pay phone stocks! The authors quote Warren Buffett: It's far better to buy a wonderful company at a fair price than a fair company at a wonderful price.
Average customer rating:
- An excellent valuation book that should be well known by a wider audience
- Ground Up Valuation Techniques
- An ideal introduction to company valuation
- A Solid Introductory Valuation Text
- Fantastic book
|
Corporate Finance: A Valuation Approach
Simon Z. Benninga , and
Oded H Sarig
Manufacturer: McGraw-Hill/Irwin
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Binding: Hardcover
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Similar Items:
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Financial Modeling - 2nd Edition: Includes CD
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Principles of Finance with Excel: Includes CD
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Valuation: Measuring and Managing the Value of Companies, Fourth Edition
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Financial Statement Analysis: A Valuation Approach (Pie)
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Building Financial Models with Microsoft Excel: A Guide for Business Professionals
ASIN: 0070050996 |
Book Description
Designed for courses in corporate finance, this text is a detailed description of the valuation process, providing an integrated, comprehensive method for valuing assets, firms, and securities across a wide variety of industries. The presentation begins with a review of financial and accounting techniques, proceeds with a presentation of the valuation process, leading towards the development of pro-forma financial statements and the translation of these projections into values. A key strength of this text is teaching students how to use pro forma financial statements as a basis for valuation.
Customer Reviews:
An excellent valuation book that should be well known by a wider audience.......2007-02-08
Simon Benninga's and Oded Sarig's "Corporate Finance: A Valuation Approach" (CFaVA) is one of those secret texts that true insiders cherish while other less efficient or significant works capture limelight.
"CFaVA" is comparable to the McKinsey group authors Koller, Goedhart, Wessels's "Valuation: Measuring and Managing the Value of Companies" and also Aswath Damodaran's "Investment Valuation: Tools and Techniques for Determining the Value of Any Asset" [Full disclosure: I've taught graduate Corporate Valuation with both texts].
Benninga and Sarig's work is excellent because it is lean while not oversimplified. The key chapter of estimating discount rates is the finest one-chapter treatment of the subject I've seen in my career, and should be required reading for any M&A or LBO banker or PE associate. The chapter on valuing by multiples is also useful for relative value and comparative scenarios for deal-makers.
Chapter 12 covers convertible securities, and it would be unfair to say it is bad simply because it is compressed and incomplete (entire libraries have been written on the subject of convertible bond valuation), but also appears out of place in the content of the book until you realize that the random elements of a stock price going forward in time intersect with capital structure choices and enterprise value, so the connection and recursive element of valuation is made at once explicit with an example.
An excellent book that should be well known by a wider audience.
Ground Up Valuation Techniques.......2002-01-18
If you are new to corporate finance valuation this book will take you to the next level. Provides step by step instruction on how to value companies. Covers Excel techniques with easy to follow examples. Covers 1 full semester at most business schools.
An ideal introduction to company valuation.......2001-09-21
This book offers a very simple introduction to evaluation of companies prior to investing. The DCF method is primarily used. There is a common thread running through the chapters which makes the book easy to understand. Its not verbose, which adds to its attractiveness. But, the readers should remember that this is only an introduction, and some other advanced book like Copeland's is needed to build upon the ideas presented in the book.
A Solid Introductory Valuation Text.......2000-12-18
This book does a good job of logically explaining the step-by-step method of corporate valuation. Benninga and Sarig do a good job of focusing on the practical tools of finance. I only wish the DCF examples were less simplistic. A substantial amount of additional work is needed to apply these models to real world firms.
Fantastic book.......2000-05-22
This book serves as an excellent introduction to and/or refresher on valuation techniques. The entire valuation process (primarily DCF) is broken down into a series of steps, each of which gets its own complete chapter. Each chapter is well written and builds on its predecessors.
A particular strength of the book is the authors' reference to Excel functions and which ones are useful in valuation models. This book is not just theory; there are concrete "how to" examples throughout. Once you've finished this book, you can do more than cite valuation theory: you can build valuation models.
One of the best finance books I've ever read.
Book Description
When should you acquire a target or enter a new business? How do you go about structuring and valuing leveraged buyout transactions? What do you do id the application of the weighted average cost of capital approach is not correct? Answers to these commonly encountered valuation problems and more are given right here in this complete valuation toolkit for mergers, buyouts, and restructuring. Enrique Arzac, an internationally recognized authority on the subject, provides an up-to-date, comprehensive synthesis of current valuation theory and practice, including free cash flow valuation, financing and valuation of leveraged buyouts, real option analysis for entry and exit decisions, contract design to resolve disagreements about value, and the valuation of special offer structures.
Customer Reviews:
Hard but very comprenhensive and useful .......2007-06-03
This book is a must for anyone who desires to improve her valuation and modeling skills.
It includes well detailed examples of LBO deal, which is quite rare in the literature.
The computation of the wacc is very comprehensive (may be too much) but the reader does not need to understand it to benefit from the other valuable chapters and demonstrations.
Planet Best.......2006-11-22
I have read many many books on Valuation for investment banking purposes. Many of them have good theories and decent number crunching. But this is the best one in regard technical aspects of finance. It's not for everyone. The book really is for practioner and MBA students who want go ahead of their peers. If you are through with this book nobody can beat you in valuation world.
Enrique I would really want you to cover Project Finance in your next addition.
I thoroughly enjoyed the book and liked the technical cocenpts especially the explanation about fomulas and derivations at the end of the book. Moreover the book is absolutely to the point and covers analytical part of Valution for M&A, LBO and Restructuring.
Great Work Enrique.
Manu
For those who love going into the detail..........2006-06-20
This is one of the best books I have read to date on Valuation. It spanks various methodologies and speaks to their differences. It goes into the detail and stays there to provide the depth necessary to get a intuative understanding. WARNING: not for those who do not like math. You can follow the derivations and I found it very good practice and reinforcement to learning the concepts.
Buy it and try it on a company in the news.
Cool!
OK but very technical.......2006-03-03
Overall, the book covers relevant M&A material but it's difficult to read. Coming from a finance background, I was looking for a reference book to be used at work. There are other books that are more user-friendly. Recommendation: get Applied Mergers & Acquisitions from Wiley Finance instead; same topics but a pleasure to read.
Purely for Reference.......2006-01-14
As an M&A finance practitioner, I am torn between giving this book a 3-star or 4-star rating. As many reviewers have noted, this is structured to be a reference book. There is more math than is typically needed or used in most small or medium-sized transactions, and there is very little introductory material for the uninitiated to get their bearings. Instead, the books delves straight into valuation exercises that are at times even more difficult than what I have encountered in the profession. The examples, while numerous and varied, are often reviewed much too quickly, and occasionally with so many permutations and small digressions that it is difficult to keep track of the purpose of the original endeavor. And as good students know, it is very hard to remember how to do something when you do not know *why* you are doing it. As such, it is difficult to recommend this book with much enthusiasm to anyone who does not at least have a few transactions under their belt because as a general guide it does not at all do the trick.
However, for more experienced users, it can come in handy, although I will still have to say that information is unnecessarily difficult to find. I feel like this book is so dense that it would be much more effective in an electronic (and hence, searchable) version. That being said, I really enjoyed a few chapters, including Chapter 9, which had some excellent examples of the effect different tax treatments have on a transaction. It came in very handy for a deal I was working on where I had to deal with NOLs.
Book Description
This book is designed to simplify the process of attaching a dollar amount to intangible assets, be it for licensing, mergers and acquisitions, loan collateral, or investment purposes. It provides practical tools for evaluating the investment aspects of licensing and joint venture decisions, and discusses the legal, tax, and accounting practices and procedures related to such arrangements; examines the business economics of strategies involving intellectual property licensing and joint ventures; and provides analytical models that can be used to determine reasonable royalty rates for licensing and for determining fair equity splits in joint venture arrangements.
Download Description
This book is designed to simplify the process of attaching a dollar amount to intangible assets, be it for licensing, mergers and acquisitions, loan collateral, or investment purposes. It provides practical tools for evaluating the investment aspects of licensing and joint venture decisions, and discusses the legal, tax, and accounting practices and procedures related to such arrangements; examines the business economics of strategies involving intellectual property licensing and joint ventures; and provides analytical models that can be used to determine reasonable royalty rates for licensing and for determining fair equity splits in joint venture arrangements.
Book Description
Applied Equity Analysis treats stock valuation as a practical, hands-on tool rather than a vague, theoretical exercise—and covers the entire valuation process from financial statement analysis through the final investment recommendation. Its integrated approach to valuation builds viable connections between a firm’s competitive situation and the ultimate behavior of its common stock. Techniques explained include EVA, newer hybrid valuation techniques, and relative multiple analysis.
Download Description
Applied Equity Analysis treats stock valuation as a practical, hands-on tool rather than a vague, theoretical exercise--and covers the entire valuation process from financial statement analysis through the final investment recommendation.
Customer Reviews:
great book for those in finance.......2006-06-20
This book is great if you're in the field of finance. This is not for the average consumer looking for investment advice. I've been in corporate financial planning and analyis for the past five years and always wondered how equity analysts built their models. This books will give you insight into their thinking and also give enough detail to build your own models. I would have rated it five stars if the book included a CD with his examples in Excel. The author does have website where you can download sample models.
for SELL-SIDE analysts only.......2006-01-14
I bought this book based on the strong reviews as a complement to Damodaran's classic on valuation, but felt disappointed.
To qualify my comments: First, I am not a sell-side analyst, and secondly, I haven't finished the book. After about 50 pages, I threw in the towel.
My first stylistic objection to the book is its low content density. There is tremendous repetition and examples are trotted out in excruciating detail, even where the conclusions are fairly obvious. For example, on p. 34: "At competitive equilibrium, the firm can identify no incremental investment opportunities likely to generate returns in excess of capital costs. Competitive equilibrium is often defined as a condition in which investment opportunities generate returns equal to capital costs, but existing investments continue to earn abnormal rates." To me these two sentences are already redundant. But in case you still didn't get it, further DOWN on the SAME PAGE: "...This situation is called economic equilibrium, or economic parity. What does equilibrium mean? When returns are forced down to capital costs, then economic rents and/or abnormal earnings disappear and no further incentive to enter the business exists".
But the most frequently repeated point of the first two chapters, is best summed up on p. 19: "As I say many times in the coming pages [and he's not kidding, there], equity analysis is not prophecy; it's opinion. It was never meant to be objective description, but it is strong advocacy." If you're the sell-side analyst, having to "dress up a pig" to help your firm gain some banking business, this book might offer some ideas. But where does this leave the consumer of such analysis? "It's the investor's job to 'diversify' by considering a variety of analysts' positions." (p.9)
I think better advice for the investor might be to learn how to perform sound analysis themselves. For that, I recommend Damodaran's book. I lost my faith in this book's intent to provide balanced (let alone predictive) analysis.
One of the Best.......2005-11-01
There are reams and reams of investment valuation books on the market -- that is obvious.
In my opinion, the three no one should be without are Applied Equity Analysis, Stephen Penman's monster tome "financial statements and...", and lastly, Aswath Damadoran's book, "investment valuation."
Most hyperventilating MBAs default to Damadoran; I really enjoy the simplicity behind Applied Equity Analysis.
Caution: Neither of the 3 are what you'd call "light reading."
If you have any money left, honorable mention goes to Cooke's "security analysis on wall street."
Probably the best.......2004-07-15
I've been looking for a practical step by step book on equity analysis from a practitioners viewpoint. This is it. Other books try to take shortcuts. This book does not take short-cuts, but neither is it bogged down with unncessary academic exercises. If you really want to understand how to do valuation and applied equity analysis I can't recommend any book more highly. It is head and shoulders above anything else out there. Penman's book (from Columbia Business School) is also good but it is a VERY serious and weighty book that probably should only be attacked after you have read this one. Get this book by English and you will not be sorry. I have spent way too much time reading hundreds of other books that weren't nearly as educational. Again, however, it is only for the serious investor.
Very readable, very insightful, and extremely practical.......2001-09-23
James English's "Applied Equity Analysis" is a how-to manual on evaluating stocks based on his 20 years of experience at JP Morgan. The book is very well-written and readable since the author employs plain english (no pun intended) to make his three major points: 1) accounting numbers--while by no means perfect--are excellent tools in evaluating stocks, 2) accounting-based stock valuation is superior to (but does not neccessarily supplant) cash flows, and 3) competition ensures that eye-popping financial performance doesn't last forever.
Contrary to another reviewer, English employs excellent examples to clarify and explain his points. Some examples: Gateway 2000's earnings history was used to explain how to find and interpret non-recurring items (NRI) on financial statements. Ratio analysis was demonstrated by looking at the PC industry in 1998. Emerson Electric was the company chosen to show why mature companies were still good buys. Many other examples abound, and English does a successful job in tying their relevance to his arguements.
But successful use of examples is not just the only strength of the book. The author also tackles a range of topics complete with insightful and clear discussions: the flaws of the Efficient Market Hypothesis (EMH), Economic Value Added (EVA), financial statement analysis, fundamental analysis, etc.
A quick glance at the table of contents below gives you an idea of the scope of English's book. I highly recommend this book to not just Wall Street analysts, anyone who is interested in finding fundamental value in evaluating stocks instead of following the crowd.
Pt. 1 Getting Started
Ch. 1 A Day in the Life
Ch. 2 Fundamentals of Equity Valuation
Ch. 3 Strategy and Competition I: The Firm's External Environment
Ch. 4 Strategy and Competition II: The Firm's Internal Competitive Resources
Ch. 5 Fundamentals of Stock Behavior
Pt. 2 The Basic Tools
Ch. 6 Reading a Financial Statement: The Accuracy, Sustainability, and Predictability of Financial Information
Appendix 6-1 Gateway Financial Statements
Ch. 7 Reading a Financial Statement: the Composition of Returns
Appendix 7-1 Comparative Financial Analysis: Personal Computer Industry
Ch. 8 Reading a Financial Statement: Early-Stage Companies and Investment Capacity
Ch. 9 Reading a Financial Statement: Later-Stage Companies and the Transition to Maturity
Ch. 10 Economic Value Added: An Alternative to Traditional Analysis Techniques
Appendix 10-1 Gateway's Cost of Capital
Pt. 3 Financial Models
Ch. 11 Financial Modeling: Base Case Assumptions and Model Design
Appendix 11-1 Dell Computer Corporation Consolidated Statement of Income
Ch. 12 Financial Modeling: The Income Statement and Balance Sheet
Ch. 13 Financial Modeling: The Statement of Cash Flows
Pt. 4 Equity Valuation
Ch. 14 Valuation: Foundations and Fundamentals
Ch. 15 Combat Finance: Relative Methods and Companion Variable Models
Ch. 16 Hybrid Valuation Techniques
Ch. 17 The Quirky Price/Earnings Ratio
Ch. 18 Valuation of Speculative Stocks
Ch. 19 Equity Analysis and Business Combinations
Pt. 5 Getting It Down on Paper
Ch. 20 Financial Writing: Don't Bury the Lead
Bibliography
Index
Book Description
A theoretical and practical guide that enables readers to make sound investment and financing decisions
This book is a technical finance book that surveys the private capital markets-the major uncharted financial market. Representing nearly half of the U.S. gross national product, these markets are largely ignored, partially because of the difficulty obtaining information and because of the lack of a unified structure to approach them. This book provides a structured framework that owner-managers and their professional advisors can use to effectively deal with the complicated issues of valuation and capital structure and transfer issues.
Robert T. Slee, CBA, CPIM (Charlotte, NC), is President of Robertson Foley, an investment banking firm providing corporate finance service to private companies.
Download Description
A theoretical and practical guide that enables readers to make sound investment and financing decisions
This book is a technical finance book that surveys the private capital markets-the major uncharted financial market. Representing nearly half of the U.S. gross national product, these markets are largely ignored, partially because of the difficulty obtaining information and because of the lack of a unified structure to approach them. This book provides a structured framework that owner-managers and their professional advisors can use to effectively deal with the complicated issues of valuation and capital structure and transfer issues.
Robert T. Slee, CBA, CPIM (Charlotte, NC), is President of Robertson Foley, an investment banking firm providing corporate finance service to private companies.
Customer Reviews:
Comprehensive and multidisciplinary approach to valuation.......2007-09-16
This book clarifies several obscure aspects and concepts of valuation of any company by providing an innovative approach to the subject, and its content also reflects well the needs of those working with evaluating non listed assets or willing to further understanding myriad aspects that are important in any transaction involving small to middle market companies.
Valuation and deal making practitioners will find in this book an in-depth conceptual understanding of the risk-reward trade-off existing in major capital structure decisions by looking at all major funding alternatives, their risk, cost to borrower and return to fund providers at different levels of claims and their consequent pledges.
In addition, this book provides a fresh view on different levels/structures of financial sponsoring companies, ownership and/or control issues and other intricacies regarding the relation of entrepreneurs and financists when dealing with transaction's high level issues.
At Last...a Finance and Valuation Text for Privately Owned Companies!.......2007-01-24
Performing fair market valuations keeps thousands of appraisers busy in the United States. Most professional appraisers rarely venture outside of this one standard of value. Now imagine if fair market value accounted for less than 10% of the appraisal needs of the private capital markets. The private appraisal market would be huge! This is just one of the many messages contained in Robert T. Slee's book, Private Capital Markets.
Slee's book is not strictly a valuation book; rather, it is a conceptual Lewis & Clark-type survey of the private capital markets. This is the first book that attempts to develop a unified structure for the analysis of these markets. Think of it as a private finance textbook. Why do we need this?
Slee's premise is that the body of financial knowledge explaining the behavior of private players differs from corporate finance. Economists created corporate finance in the 1960s to explain the behavior of large public companies. Since that time, business professors have taught finance as if only public companies exist in the market. In fact, more than 99% of the companies in the United States are privately held. Private Capital Markets, on the other hand, focuses on the financial motives and needs of private company owners and their advisors.
In this book, Slee establishes private capital markets theory. This theory describes an integrated body of knowledge encompassing the valuation, capitalization and transfer of private companies, particularly those with annual revenues between $5 million and $500 million. Slee designed this theory to help players make better financing and investment decisions in private markets. He asserts that business owners can create competitive advantages with these tools.
Slee explains that valuation, capital, and transfer issues are inter-related and inter-dependent. This means that you cannot fully understand valuation, capital, or transfer discretely: You must first understand how they all fit together. He calls this holistic interconnection Triangulation. Each chapter of the book triangulates the reader's position so they understand their position within the private markets.
Slee introduces the new framework of value worlds to explain valuation, capital, and transfer. Value worlds dramatically extend the appraisal concept of standard of value. We all know that value is relative to the purpose of an appraisal. Slee illustrates how purpose selects a value world. As many value worlds exist as there are appraisal purposes. There are dozens. Because the valuation rules are different in each world, every private company has dozens of correct values at the same time.
Who sets the rules? Various authorities create and enforce the rules in each value world. For instance, in the fair market value world, the IRS, tax courts, ERISA laws, appraisal societies, and various other authorities tell appraisers how to value business interests within each's sphere of influence. Some authorities (IRS) have fairly strong sanctioning power; others (administrative rulings) can only suggest a course of action. Most value worlds, such as the owner or investment value worlds, have only one or two authorities. Slee's value world construct puts appraisers in their true role: as interpreters of authorities' decisions. This won't sit well with many appraisal purists, who for years have believed that they are authorities.
Slee views valuation as the common language that unites the private capital markets. He argues that we need this language to communicate with each other over capital structure and business transfer issues. Thus, the book surveys the entire capital and transfers spectrums of the private capital markets. It describes all institutional types of capital in terms of their access, sample terms, and effective all-in costs. Finally, Slee explains all transfer methods making up the private business transfer spectrum.
One surprise that springs from the book is that transfer methods select value worlds. This means that once a business owner chooses the method (ESOP, recapitalization, estate-planning, etc.) of transferring their business, they also choose (unknowingly in most cases) the transfer value as well.
This book and subsequent analyses of the private markets will likely impact fair market value appraisals significantly in a way that the book does not address. Businesses appraised for fair market value purposes are real flesh and blood businesses that operate in the private markets. As our young profession matures, continuing to treat private companies as if they operated in a market similar to the public markets will appear more futile.
Private Capital Markets is comprehensive and is aimed at the serious reader. Because we can competently value private businesses only to the extent we understand the private markets, this book belongs in every appraiser's library.
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