How can we value an enterprise, like a young internet start-up company, that has no earnings or cash flows, so that traditional and conventional valuation techniques are therefore not applicable? One of the most notable recent industrial revolutions has been the emergence of Biotechnology and Internet companies. Most of these technology companies are predominantly young with no history of earnings or cash flows to evaluate. This book addresses the problem, and presents a model for valuing enterprises that may have no existing assets but only growth opportunities.
How can we value an enterprise, like a young internet start-up company, that has no earnings or cash flows, so that traditional and conventional valuation techniques are therefore not applicable? One of the most notable recent industrial revolutions has been the emergence of Biotechnology and Internet companies. Most of these technology companies are predominantly young with no history of earnings or cash flows to evaluate. This book addresses the problem, and presents a model for valuing enterprises that may have no existing assets but only growth opportunities.
Richard E. Ottoo is Assistant Professor of Finance at Pace University.
Inhaltsangabe
List of Tables List of Figures 1. Growth Opportunities: An Overview Introduction Growth Opportunities Financing Constraints Basic Approaches to Valuation Conclusion The Valuation Model Investment Decision Production Decision Marketing Decision Overall Value of Corporate Growth Opportunities Conclusion 3. Comparative Static Analysis Introduction Choice of the Level of R&D Growth Value in the Case of a Monopoly Growth Value in the Case of Collusion Value of Growth Opportunities with R&D Value of Growth Opportunities with Rival R&D Growth Opportunities with Size of Innovation Rents Growth Opportunities with Strike Price The Impact of R&D on the Expected Time of Discovery Growth Opportunities with the Expected Time of Innovation Growth Opportunities with the Return on the Hedge Portfolio Conclusion 4. Scenario Analysis: A Case Study of a Biotechnology Company Company Background Market Trend Industry Competition Risks Investment Analysis 5. Financing a Growth Project: A Binomal Approach Introduction Operating Flexibility Financing Flexibility The Project The Binomial Framework Conclusion 6. Empirical Analysis Data Sources and Empirical Design Empirical Results The Fama-French Methodology Conclusion Summary, Problems and Future Research Summary Determining Parameter Values Data and Sample Selection Problems Future Research Concluding Remarks Appendix I Appendix II Appendix III Bibliography Index.
List of Tables List of Figures 1. Growth Opportunities: An Overview Introduction Growth Opportunities Financing Constraints Basic Approaches to Valuation Conclusion The Valuation Model Investment Decision Production Decision Marketing Decision Overall Value of Corporate Growth Opportunities Conclusion 3. Comparative Static Analysis Introduction Choice of the Level of R&D Growth Value in the Case of a Monopoly Growth Value in the Case of Collusion Value of Growth Opportunities with R&D Value of Growth Opportunities with Rival R&D Growth Opportunities with Size of Innovation Rents Growth Opportunities with Strike Price The Impact of R&D on the Expected Time of Discovery Growth Opportunities with the Expected Time of Innovation Growth Opportunities with the Return on the Hedge Portfolio Conclusion 4. Scenario Analysis: A Case Study of a Biotechnology Company Company Background Market Trend Industry Competition Risks Investment Analysis 5. Financing a Growth Project: A Binomal Approach Introduction Operating Flexibility Financing Flexibility The Project The Binomial Framework Conclusion 6. Empirical Analysis Data Sources and Empirical Design Empirical Results The Fama-French Methodology Conclusion Summary, Problems and Future Research Summary Determining Parameter Values Data and Sample Selection Problems Future Research Concluding Remarks Appendix I Appendix II Appendix III Bibliography Index.
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