Richard Razgaitis

Dealmaking (eBook, PDF)

Using Real Options and Monte Carlo Analysis

• Format: PDF

Produktbeschreibung

Applying practical tools to the volatile process of negotiating Prognosticators apply Monte Carlo Analysis (MCA) to determine the likelihood and significance of a complete range of future outcomes; Real Options Analysis (ROA) can then be employed to develop pricing structures, or options, for such outcomes. Richard Razgaitis' Dealmaking shows readers how to apply these powerful valuation tools to a variety of business processes, such as pricing, negotiating, or living with a "deal," be it a technology license, and R&D partnership, or an outright sales agreement. Dealmaking distinguishes itself from other negotiating guides not only by treating negotiations as an increasingly common situation, but also by presenting a tool-based approach that creates flexible, practical valuation models. This forward-thinking guide includes a variety of checklists, case studies, and a CD-ROM with the appropriate software. Richard Razgaitis (Bloomsbury, NJ) is a Managing Director at InteCap, Inc. He has over twenty-five years of experience working with the development, commercialization, and strategic management of technology, seventeen of which have been spent in the commercialization of intellectual property.

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Produktdetails

• Verlag: John Wiley & Sons
• Seitenzahl: 312
• Erscheinungstermin: 1. April 2004
• Englisch
• ISBN-13: 9780471452010
• Artikelnr.: 37301708

Autorenporträt

RICHARD RAZGAITIS is a managing director at InteCap, Inc. A recognized leader in the field of licensing and valuation, he has over twenty-five years of experience working with the development, commercialization, and strategic management of technology, seventeen of which have involved the commercialization of intellectual property.

Inhaltsangabe

Chapter 1
Introduction 1
Why Another Negotiating Book? 1
Dealmaking(TM) 3
High Significance, High Ambiguity Contexts 4
The "So What?" Question 8
Valuation, Pricing, and Negotiation 8
Tangible and Intangible Content/Value and the New Economy 9
The I Dealmaking Process 10
Organization of the Book 13
Chapter 2
Negotiation People, Language, and Frameworks 15
Negotiation People 15
A Quest 21
The Nut, the Number, the Bogie, and the Toe Tag 23
Quantification, Rationality, and Hyperrationality 24
Chapter 3
The Box and the Wheelbarrow: What Am I Selling (or Buying)? 31
The Box 31
The Wheelbarrow 36
Dealmaking's Spine 41
The Term Sheet 42
Methods and Tools 42
Chapter 4
Discounted Cash Flow Analysis and Introduction to Monte Carlo Modeling 45
Discounted Cash Flow Analysis 45
Scenario (DCF) Analysis 50
Monte Carlo Method: An Introduction 64
Closure and Application to Negotiation 72
Chapter 5
Monte Carlo Method 77
A Model Cash Flow Template 78
Income and Cash Flow Statements: 3M Example 79
Monte Carlo Assumption Tools 91
Uniform Distribution: Highest Uncertainty Between Certain Bounds 91
Triangular Distribution 94
The Normal Distribution 97
Other Distribution Functions 100
Monte Carlo Model of the DCF Template 102
Combined CAGR and Cost Ratio Uncertainty Distributions 102
Correlating Assumptions 105
Additional Assumption Distributions 107
Twentieth (and Other) Percentile Valuations 108
Comparison of Monte Carlo Results with DCF (RAHR) Method 114
Scenario Modeling in Monte Carlo 115
Monte Carlo Tools for Determining Variable Significance 120
Final Points on the Monte Carlo Model 121
Appendix 5A: Crystal Ball Report Corresponding to the Results Presented in
Exhibit 5.15 for a Uniform Cost Distribution Assumption 126
Appendix 5B: Crystal Ball Report Corresponding to the Results Presented in
Exhibit 5.16 for a Double-Humped Cost Distribution Assumption 135
Chapter 6
Introduction to Real Options 147
Perspective 1: Discounted Cash Flow (DCF) View of the Six-Scenario
Opportunity 148
Perspective 2: Real Option View of the Six-Scenario Opportunity 151
Perspective 3: A Model for a Buyer's Counteroffer 154
Black-Scholes Equation for Option Pricing 156
The Black-Scholes Equation Applied to an Option to a Share of Yahoo! 157
What Do Equations Represent? "What Is Truth?" 161
Using Black-Scholes for an Opportunity Valuation 167
Summary of Real Option Realities versus Black-Scholes 171
Chapter 7
Real Options Applied to Dealmaking 175
Beyond Black-Scholes 177
Emergence of Real Options Analysis 179
Introducing the Binomial Lattice for Real Options 186
Calculating Option Values from Binomial Matrices 192
Calculating Option Values Using Decisioneering's Real Options Analysis
Toolkit 196
Using Real Options Analysis Toolkit Software in Dealmaking 201
Calculating (or Estimating) Option Volatility 204
Calculating the Option Value of Options on Options 210
Conclusions and Observations 212
Appendix 7A: Real Options Equations 215
Chapter 8
Knowledge and Unertainty 219
Future Knowledge 219
Dealing with Uncertainty 221
Standards 226
What About Truth? 229
Chapter 9
Deal Pricing 233
Simple Pricing 233
Box Pricing 235
Wheelbarrow Pricing 236
Total Cash Payment 236
Cash When 239
Cash Maybe 239
Cash As 240
Cash Substitutes 240
Term Sheets 241
Chapter 10
Negotiation Perspectives and Dynamics 243
Negotiation Perspectives 243
Negotiating Sequencing 246
Issue Explosion 249
Negotiating Values 252
Deal/Agreement Complexity 252
Chapter 11
Plan B 255
Auctions and Betrothals 255
Plan B Analysis and Tools 257
Plan B Implementation 265
Plan B Caution 266
Plan B from the Buyer's Perspective 267
Plan B and Life 267
Chapter 12
Conclusion 273
In Theory, In Practice 273
Value Creation by Dealmaking 274
A Final (True) Story 278
Bibliography 281
Index 283