Aswath Damodaran – Laws of Valuation: Revealing the Myths and Misconceptions - Nordic Business Forum

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Nov 13, 2018

The Corporate Finance and Valuation Professor shares why companies need to accept that they go through life cycles, and explains how their focus should change in each stage of the l... Show More

The Corporate Finance and Valuation Professor shares why companies need to accept that they go through life cycles, and explains how their focus should change in each stage of the life cycle.

Key points:
• All companies go through life cycles - they are born, they grow, they mature and they decline.
• The focus of a company needs to change as it moves through the life cycle - companies need to act as is appropriate for their age.
• The qualities of a good CEO also change in the different stages of a company’s life cycle.
• Valuation shouldn’t only be about numbers - a good valuation also has a story embedded in it.

Key questions:
• What life cycle is your company going through at the moment?
• Is your company “acting its age”?
• Is the focus of your company appropriate to its age?
• Does your valuation tell a story?

You can also find a written summary of the keynote at https://www.nbforum.com/event-summaries/

Bio:
Aswath Damodaran is the Kerschner Family Chair Professor of Finance at the Stern School of Business at New York University. He teaches corporate finance and valuation courses in the MBA program. He received his MBA and Ph.D. from the University of California at Los Angeles. His research interests lie in valuation, portfolio management, and applied corporate finance. He has published in the Journal of Financial and Quantitative Analysis, the Journal of Finance, the Journal of Financial Economics, and the Review of Financial Studies. He has also written four books on valuation (Damodaran on Valuation, Investment Valuation, The Dark Side of Valuation, The Little Book of Valuation), and two on corporate finance (Corporate Finance: Theory and Practice, Applied Corporate Finance: A User’s Manual).

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This presentation took place at Nordic Business Forum 2018 on 26.-27. September in Helsinki, Finland. The event gathered together 7500 CEOs, top executives, and entrepreneurs from over 40 countries.

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Website: http://www.nbforum.com
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(From Youtube)

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Atiyenur Uygur @Atiye · Sep 9, 2023

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As a follower of Prof. Damodaran, that is one of his best talks. Here are some key takeaways: Valuation is a bridge between stories and numbers. - The words used to describe a business can greatly impact its valuation. - For young companies, the story defines the valuation. - For mature companies, the numbers drive the valuation. "when I valued Uber in June 2014, Uber was still startup that a young company losing a lot of money. My entire valuation was built around my story about Uber being an urban car service company that drove my entire valuation. Bill Gurley venture capitalist one of the leading investor in Uber said: You got the story all wrong. Uber is not a car service company, it's a logistics company. He tripled the size of his business. We could be in delivery and moving, we are going to be everywhere. By using the words logistics, my value for Uber was 6 billion, his value is 53 billion and what separated us was the story."