Chapter/Session 13: Valuing and Pricing Declining Firms

Session Description: In this session, I argue that valuing declining firms is daunting, since the value you attach to a business is very much a function of whether you believe that the management of these firms is in denial, acceptance or actively working towards a rebirth. I also look at pricing a firm with declining revenues and margins under pressure is different, with both healthy and declining peer group companies in the mix.
Slides: pages.stern.ny...
Exercise:
For the declining company in your peer group:
a. Given what you have learned about your company, what is your valuation story?
b. Does your valuation story pass the 3P test?
c. How does your valuation story play out in your valuation inputs (revenue growth, margins, reinvestment, and risk)?
d. Given these valuation inputs, what is your valuation for the company?
e. How uncertain are you about this valuation? How do you deal with this uncertainty?

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Thank you!