110 Common Errors in Company Valuations

Pablo Fernández and Andrada Bilan
Authors registered in the RePEc Author Service: Pablo Fernandez

International Journal of Economics & Business Administration (IJEBA), 2013, vol. I, issue 1, 33-78

Abstract: This paper contains a collection and classification of 110 errors seen in company valuations performed by financial analysts, investment banks and financial consultants. The author had access to most of the valuations referred to in this paper in his capacity as a consultant in company acquisitions, sales, mergers, and arbitrage processes. We classify the errors in six main categories: 1) Errors in the discount rate calculation and concerning the riskiness of the company; 2) Errors when calculating or forecasting the expected cash flows; 3) Errors in the calculation of the residual value; 4) Inconsistencies and conceptual errors; 5) Errors when interpreting the valuation; and 6) Organizational errors.

Keywords: Company valuations; valuation errors; valuation (search for similar items in EconPapers)
JEL-codes: G12 G31 M21 (search for similar items in EconPapers)
Date: 2013
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4)

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Related works:
Working Paper: 110 common errors in company valuations (2007)
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Persistent link: https://EconPapers.repec.org/RePEc:ers:ijebaa:v:i:y:2013:i:1:p:33-78

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