Fishing For Value Summary and Analysis

Valuation is the process of assigning a monetary figure to a business for sale or purchase, or the value of bonds to be sold, etc. In a perfect financial world, value is determined by comparison to other like products, to actual assets of a company or to market trends. In the investment banking world, however, just the opposite occurs. A managing director or senior vice-president decides in advance what the value must be in order to seal the deal, and then demands that the associate meet that value figure with whatever creative methods he may need to use. Two of these methods are as follows:

Comparable Multiples Analysis: This method of valuations involves finding "comps," or businesses of the same nature, and then valuing the company in question according to those comps. If the comp values were...