VALUE – Worth of an object in another point of view FUNDAMENTAL ANALYST
CAPITAL – “Scarce Resources” Compete to obtain and ➢ Focuses on investigation or the review of the
Efficiently Managed. performance of business operation.
VALUATION – Estimation of assets value based on variables ACTIVIST INVESTOR
that perceived to be related to the future
➢ Types of Investors who Invest in Lower Businesses
investment amount.
that are expected to Grow Along with their
ALFRED MARSHALL Investment, Resulting in a Higher Return
➢ “Company creates value if and only if the return on CHARITIST
capital investment exceed the cost of acquiring capital.”
➢ A chartist is someone who studies financial charts
3 MAJOR FACTORS IN VALUING A BUSINESS to predict market trends and make investment
1. CURRENT OPERATION decisions.
➢ Observation on how well the performance of the INFORMATION TRADERS
business operation.
➢ Investors who make buying or selling decisions
2. FUTURE PROSPECT
based on news, data, or other information they
➢ Preparing and Prioritizing Long-term plan believe will impact the market.
3. EMBEDDED RISK ACTIVITIES
➢ Risk encountered during ongoing operation.
STOCK SELECTION
2 FACTORS THAT MAKE THE BUSINESS ENVIRONMENT ➢ Always Fair Price: choosing which stocks to buy or
DYNAMICS sell based on analysis.
1. TURNOVER OF TECHNOLOGIES DEDUCING MARKET EXPECTATION
➢ The turnover of technologies means that businesses ➢ Market Situation reflect on investor that involves in
must constantly adapt to new tools and innovations predicting future market movements based on
to stay competitive. available information.
2. RAPID GLOBALIZATION
2. ANALYSIS OF BUSINESS TRANSACTION / DEAL’S
➢ refers to how businesses are increasingly
interconnected across the world, creating new ➢ examining the details and impact of business
opportunities and challenges while being operated deals to understand the effects on the company’s
globally. financial position and performance.
ACQUISITION
VALUATION OF VALUE
➢ Acquiring or buying a firm / Company
• INTRINSIC VALUE
MERGER
➢ Company’s True Value
➢ Combination of 2 companies into 1
• LIQUIDATION VALUE
DIVESTITURE
➢ Higher chance of being incapable of operating in
➢ Major components of the company that sell in the
the future
market to make the brand known.
• GOING CONCERN VALUE
➢ Foreseeable Value: “The worth of a business SPIN - OFF
assuming it will keep operating in the future.” ➢ Small Part of the Company that’s separated from
• FAIR MARKET VALUE the original
➢ Both the seller and the buyer meet the price and (Ex. NCST Business Dept. is separated from NCST COLLEGE)
agreed to sell and buy.
LEVERAGED BUY-OUT
ROLES OF VALUATION
➢ Company is bought using borrowed money, with
1. PORTFOLIO MANAGEMENT
the company's assets often used as collateral for
➢ Focuses more on the stock, shares, and analysis of
the files. Such as document, transaction, or the loan.
Contracts.
IMPORTANT UNIQUE FACTOR
1. SYNERGY
➢ Two companies combine to create more value
together than they could separately.
2. CONTROL
➢ Having the power to make decisions and
influence a company’s operations.
3. CORPORATE FINANCE
➢ Involves managing a company’s financial
activities, including investments, funding, and
capital structure.
4. LEGAL & TAX PURPOSES
➢ Ensuring compliance with laws and optimizing tax
benefits in financial dealings.
5. OTHER PURPOSES
• FAIR OPINION FOR VALUATION
➢ Provides an unbiased assessment of a company's
worth, often by a 3RD party like a bank.
• ASSES POTENTIAL LENDING ACTIVITIES
➢ Involves evaluating a company's ability to
handle new loans.
• SHARED-BASED PAYMENT / COMPENSATION
➢ when employees are paid with company shares
or stock options as part of their compensation.
VALUATION PROCESS (INDUSTRY RIVALRY)
➢ Less Competitors, Higher Customer
1. Understanding of the business.
2. Forecasting financial performance.
3. Selecting the right valuation models.
4. Preparing valuation model based on forecast.
5. Applying condition and providing recommendation.
NEW ENTRANT
➢ Entering the business Industries while competing
with existing bigger business.
SUBTITUTE AND COMPLEMENTS
➢ Alternative Products on the market
➢ Relationship of existing product on industries