Value Sweep: Mapping Corporate Growth Opportunities
Harvard Business School Print
Harvard Business School Print
The stock market routinely values corporate growth opportunities. But inside companies, managers struggle to quantify the value of growth initiatives and to align internal valuations with those in the financial markets. Value Sweep is the first book to lay out a simple and transparent valuation method that works for the varied growth opportunities facing the modern corporation. Based on extensive research and years of frontline work within corporations, valuation and strategy expert Martha Amram takes readers beyond the numbers, providing a new lens and a better vocabulary for envisioning, understanding, and valuing growth across a wide sweep of assets-from mature businesses to those being reshaped by intellectual property and e-commerce. Rigorous, yet easy to use, this innovative approach allows managers to place diverse growth projects on a single "map" of value. This comparison enables them to better direct resources and attention to the most valuable projects. Value Sweep tackles the hard valuation issues and shows: When to use traditional valuation methods, such as Discounted Cash Flow, and when to use more innovative methods such as decision analysis or real options How to quickly value growth opportunities and compare the result to sensible valuation benchmarks Why venture capital valuations are so sensitive to fluctuations in the stock market Why it is difficult to value intellectual property and how to use approximate valuation results in negotiations Why the simplest valuation methods work best for investments in information technology How to roll up project-level valuations into a corporate growth engine AUTHORBIO: Martha Amram is an independent consultant and adviser to Fortune 500 companies and start-ups, and the author of Real Options (ISBN 0875848451, HBS Press, 1998). She lives in Palo Alto, California.
First book to lay out a simple and transparent valuation method that works for the varied growth opportunities facing the modern corporation. Based on extensive research and years of frontline work within corporations.
This book was written for decision-makers in organizations which are in current or imminent need of: (a) benchmarking and comparing the value of their growth opportunities, (b) aligning the value of private growth opportunities with public market valuations, and (c) replacing complex calculations with simple and transparent methods. Amram re-examines and re-evaluates several of the core concepts which she and co-author Nalin Kulatilaka discussed in a previous work, Real Options: Managing Strategic Investment in an Uncertain World. However, as she explains in her Preface, she has since drawn two strong conclusions. "First, in many [but not all] applications, real options is not the right tool. I'll raise this issue through this book [Value Sweep] and show how to combine real options with other strategic perspectives. Second, decision analysis (and decision analysis coupled with real options) is quite an expansive approach; it can handle a lot of detail. Often, however, the detail overwhelms the rationale."