Valuation bias: Tests

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Aswath Damodaran ich side of your brain is stronger

description

Valuation bias: Tests. 1. You are valuing your own business for sale to a third person. High LowUncertain 2. You are a venture capitalist valuing this business for an investment. High Low Uncertain - PowerPoint PPT Presentation

Transcript of Valuation bias: Tests

Page 1: Valuation bias: Tests

Aswath Damodaran 1

Which side of your brain is stronger?

Page 2: Valuation bias: Tests

Aswath Damodaran 2

Valuation bias: In each scenario, is your bias to come up with a high or low value?

1. You are valuing your own business for sale to a third person. High Low Uncertain2. You are a venture capitalist valuing this business for an investment. High Low Uncertain3. You are valuing your own business for divorce court; half of your estimated value will go to

your spouse (soon to be ex-spouse). High Low Uncertain4. You are an appraiser for the owner, valuing a business for tax purposes. High Low Uncertain5. You are an appraiser for the IRS, valuing the business for tax purposes. High Low Uncertain6. You are a sell side equity research analyst, valuing a company with the intent of putting a buy or

sell recommendation on it. High Low Uncertain7. You are an M&A analyst, working for the investment banker for the acquirer in a friendly

takeover, valuing the target company. High Low Uncertain8. You are an M&A analyst, working for the investment banker for the target in a friendly

takeover, valuing the target company. High Low Uncertain9. You are an M&A analyst, working for the investment banker for the acquirer in a hostile

takeover, valuing the target company. High Low Uncertain10. You are an M&A analyst, working for the investment banker for the target in a hostile

takeover, valuing the target company. High Low Uncertain11. You are buy-side analyst, valuing a company for your portfolio manager, who already happens

to own a million shares of its stock. High Low Uncertain12. You are buy-side analyst, valuing a company for your portfolio manager, who already happens

to have shorted a million shares of its stock. High Low Uncertain


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