The Value of Nothing

Only in the last decades has business valuation become an important and widespread economic discipline. This new interest is fully justified because behind every major resource allocation decision in a business there is a calculation of what that move is worth. And the allocation of resources is a key driver of a company's overall performance. Equally valuation is a vital part of buying or selling a business, of planning for investment, taxation or flotation. Making such momentous financial decisions without knowing the current value of the company is, at the very least, risky.

This book aims to help you master advanced business valuation - understanding the benefits, limits and uses of each valuation method and how they interplay in the real world, developing a technique and an eye as well as a good working knowledge of relevant valuation history and, eventually, becoming able to value widely .different businesses uncontroversially and without the expenditure of undue resources. If you can do this consistently and reliably you will have mastered the art of advanced business valuation by moving from theory to practice.

Julian Roche specifically introduces, explains and criticises a variety of valuation techniques and indicators. These include discounted cash flow, WACC, Excess Earnings, CFROI and EVA , dividends, real options, asset valuations and valuations using ratios as well as 'rule of thumb' valuation models. In each case he assesses the method's usefulness in producing a valuation which is both accurate and useful in the real world rather than in some theoretical economy. Finally he presents the available business valuation software and suggests ways of combining methods to achieve a valuation, including continuous valuation by the management team so that they are constantly aware of the changing value of their business.

Julian Roche spent five years as a senior consultant to a venture capital company, Hudson Venture Partners, where he advised on corporate structure, flotations, trade sales and business valuations, holding that position until 2000. Since then he has been working primarily in Singapore and Europe as a consultant, advising global banks and government agencies on aspects of investment, valuation and restructuring, and is currently also working with the World Bank in Asia. He has also published a number of other books, including one on real estate derivatives.